THE  TARIFF 


WHAT  IT  IS  AND  WHAT  IT  DOES 


BY 

S.  E.  MOFFETT 

Washington  Correspondent  San  Francisco  Examiner 


JJork 
CHARLES  L.  WEBSTER  &  CO. 


1802 


zr 


COPYRIGHT,  1803,  BY  S.  E.  MOFFETT. 


CONTENTS. 


CHAPTER.  PAGE. 

I.  What  the  Tariff  Is 5 

II.  Can  a  Nation  Tax  Itself  Rich  ?.  . .  10 

III.  Who  Profits  by  the  Tariff  ? 15 

IV.  The  Tariff  and  Wages 20 

V.  The  Tariff  and  California 25 

VJ.  The  Tariff  and  Commerce 33 

VII.  The  Hawaiian  Object  Lesson 40 

VIII.  The  Balance  of  Trade 47 

IX.  The  Tariff  an^Shipping 53 

X.  The  Tariff  and  the  Foreigner 60 

XI.  Local  and  Tariff  Taxes 66 

XII.  Wages  and  Labor  Cost 72 

XIII .  How  Many  Are  Protected  ? 78 

XIV.  American  Tariff  s— Part  First 83 

XV.  American  Tariff  s— Part  Second. . .  88 

XVI.  American  Tariff  s— Part  Third ....  93 

XVII.  The  McKinley  Bill— Part  First.  . .  97 

XVIII.  The  McKinley  Bill— Part  Second. .  104 


PEEFAOE 

These  chapters  were  originally  published  in 
serial  form  in  the  San  Francisco  Examiner. 
This  explains  their  local  Californian  color, 
which  it  has  not  been  thought  necessary  to 
change.  Headers  in  other  sections  can  easily 
supply  home  illustrations  of  the  workings  of 
the  tariff  for  themselves. 


^ 

n  trv\ 


THE  TARIFF. 


WHAT  IT  IS  AND  WHAT  IT  DOES. 


CHAPTER  I. 

WHAT  THE  TARIFF  IS. 

A  tariff  is  a  system  of  taxes  levied  upon  goods 
brought  into  a  country  from  abroad.  In  this 
country  at  the  present  time  the  tariff  is  general- 
ly treated  as  a  device  for  forcing  our  people  to 
buy  American  goods  instead  of  foreign  ones. 
But  before  considering  it  in  this  light  it  will  be 
well  to  examine  it  in  its  original  aspect  as  a  tax. 
The  idea  of  raising  money  by  import  duties  is 
exceedingly  ancient.  The  Athenians  levied  a 
tax  of  two  per  cent  on  all  foreign  merchandise 
entering  their  territory.  The  Romans  had  im- 
port and  export  duties  of  two  and  a  half  per 
cent.  How  the  modern  word  tariff  commemo- 
rates the  name  of  that  fine  old  Moorish  econo- 
mist, Tarif  ibn  Malek,  who  used  to  blackmail 
all  the  vessels  sailing  past  his  stronghold  on  the 
Straits  of  Gibraltar,  is  too  well  known  to  need 
repetition.  The  Venetians  in  the  Middle  Ages 
had  discriminating  duties  and  navigation  laws 
almost  as  ingeniously  meddlesome  as  our  own. 
The  modern  world  has  refined  and  extended  the 
mediaeval  and  ancient  examples. 

5 


6  THE    TARIFF. 

As  a  tax  the  tariff  has  always  been  a  favorite 
device  of  governments,  especially  of  such  as 
were  not  sure  of  their  popularity.  It  is  easily 
collected,  it  is  indirect  and  attacks  the  final 
payer  in  disguise.  The  merchant  who  first  pays 
it  does  not  object  greatly,  for  he  simply  makes 
the  price  of  his  goods  enough  higher  to  cover 
the  duty  and  a  profit  on  the  capital  advanced  in 
meeting  it.  The  retailer  passes  the  tax  with 
another  profit  on  the  consumer.  When  the  last 
victim,  unable  to  shift  his  burden  upon  any  one 
else,  has  paid  two  or  three  prices  for  his  goods, 
he  may  possibly  grumble  at  the  extortion  of 
the  merchants,  but  it  does  not  usually  occur  to 
him  to  blame  the  Government  or  to  consider 
his  high  prices  in  the  light  of  a  tax.  From  the 
point  of  view  of  the  rulers,  therefore,  a  tariff 
affords  an  ideal  means  of  raising  money.  But 
how  is  it  with  the  people  ?  The  tariff  as  a  tax 
is  not  equal.  It  is  well  enough  for  the  rich,  but 
hard  on  the  poor.  A  direct  tax,  honestly  as- 
sessed, falls  on  men  in  proportion  to  their 
wealth.  A  tax  on  consumption  falls  almost  as 
heavily  on  the  poor  man  as  on  the  rich  one.  A 
laborer  earning  $50  a  month  may  spend  $200  a 
year  on  clothes  for  himself  and  family,  and  of 
this  at  least  $80  represents  the  tariff  tax.  A 
rich  bachelor  with  an  income  of  a  million  dol- 
lars a  year  may  get  along  with  $500  worth  of 
clothes,  of  which  the  tariff  duties  represent 
about  $200.  The  laborer's  contribution  to  the 
tariff  may  amount  to  twenty  per  cent  of  his  total 
income,  the  millionaire's  may  not  exceed  a 
quarter  of  one  per  cent  of  his.  The  tariff  may 


WHAT    THE    TARIFF    IS.  7 

thus  absorb  the  whole  of  the  poor  man's  little 
margin  for  saving,  keep  him  forever  living 
from  hand  to  mouth,  and  leave  him  with  no 
prospect  for  his  old  age.  The  rich  man's  sur- 
plus is  scarcely  touched  by  such  taxation  and 
he  can  go  on  adding  to  his  wealth  from  year  to 
year. 

We  may  assume,  therefore,  that  a  tariff  con- 
sidered merely  as  a  tax  is  not  a  good  thing.  If 
we  were  looking  at  it  solely  in  that  light  all 
would  agree  that  it  should  be  kept  as  low  as 
possible.  In  other  words,  if  we  could  not  think 
of  any  better  way  of  raising  money,  we  should 
keep  the  duties  strictly  within  the  limits  requir- 
ed to  supply  "the  needs  of  the  Government  eco- 
nomically administered."  We  should  not  be 
looking  for  ways  of  spending  our  superfluous 
revenues,  but  when  we  found  a  surplus  we 
should  promptly  reduce  the  taxes.  That  there  are 
several  million  people  who  favor  just  the  oppo- 
site course,  and  who  wish  to  see  the  taxes  raised 
whether  the  money  be  needed  or  not,  is  due  to 
another  view  of  the  tariff — not  as  a  tax,  but  as 
a  device  for  compelling  people  to  buy  homemade 
instead  of  foreign-made  goods.  It  is  in  this 
aspect  that  the  tariff  is  now  a  political  issue  in 
the  United  States,  and  it  is  in  this  that  it  will 
be  discussed  in  these  chapters. 

The  way  in  which  the  duties  are  supposed  to 
"protect"  American  industries  is  by  raising 
the  price  of  foreign  merchandise  and  thereby 
enabling  American  producers  to  charge  more 
for  their  goods.  The  early  protectionists  in  this 
country  believed  that  a  few  years  of  this  nur- 


8  THE    TARIFF. 

sing  of  home  industries  would  be  enough.  They 
thought  that  protection  was  necessary  to  enable 
our  manufacturers  to  get  on  their  feet.  They 
had  much  to  say  of  "  infant  industries,"  and 
they  said  that  they  would  welcome  free  trade 
as  soon  as  we  had  accumulated  enough  capital 
and  skilled  labor  to  enable  us  to  fight  on  fair 
terms.  But  all  these  ideas  have  been  outgrown. 
The  infant  industries  have  become  giant  monopo- 
lies. What  we  have  to  consider  now  is,  not 
whether  we  shall  give  protection  for  a  few  years 
to  struggling  young  industries,  but  whether  we 
shall  adopt  it  as  a  permanent  policy. 

One  thing  more  remains  to  be  mentioned,  be- 
fore completing  this  chapter  of  definitions.  Pro- 
tectionists often  deny  that  their  object  is  to 
increase  the  price  of  American  goods.  They 
say  that  they  expect,  by  stimulating  home  com- 
petition, to  bring  prices  even  below  the  foreign 
rates.  When  they  are  asked  what  in  that  case 
would  be  the  objection  to  removing  the  duties, 
they  say  that  but  for  the  tariff  the  foreigner 
could  pour  his  goods  into  this  country  at  less 
than  cost  until  he  had  closed  up  all  the  Ameri- 
can factories,  after  which  he  could  make  up  his 
losses  by  charging  monopoly  prices.  But 
whether  that  argument  ever  had  any  substance 
or  not  it  has  none  now.  No  establishments  in 
the  world  are  better  able  to  carry  on  a  tempo- 
rary war  of  rates  than  our  own.  Nowhere  are 
there  such  masses  of  capital  that  can  be  so  ruth- 
lessly handled  for  such  an  end.  The  English 
steelmaker  who  should  try  to  freeze  out  Mr. 
Carnegie  by  selling  goods  at  a  loss  would  be  an 


WHAT    THE    TARIFF    IS.  9 

object  of  sympathy.  He  would  find  that  a  game 
that  two  could  play  at,  and  while  he  was  dump- 
ing his  surplus  on  the  American  market,  the 
American  surplus  would  be  demoralizing  the 
home  market  of  England.  Moreover  the  devel- 
opment of  trusts  has  taught  our  manufacturers 
how  to  furl  their  sails  in  stormy  weather  and 
wait  till  the  clouds  roll  by.  Temporary  stop- 
pages of  work  for  the  sake  of  raising  prices  are 
every-day  incidents  of  business.  Therefore,  to 
make  the  protectionist  assumption  true  it 
would  not  be  sufficient  for  the  foreigner  to  close 
our  factories  temporarily.  He  would  have  to 
keep  them  closed.  To  do  this  he  would  have  to 
sell  permanently  at  a  loss,  a  thing  which  even  a 
person  as  malignant  as  the  foreign  manufac- 
turer is  popularly  supposed  to  be  would  hesitate 
about  doing. 

We  come  back,  then,  to  ordinary  business 
competition.  Our  protective  tariff  is  based  on 
the  theory  that  foreigners  can  produce  things 
and  sell  them  more  cheaply  than  Americans 
can,  and  it  aims  to  equalize  the  difference 
by  increasing  the  cost  of  foreign  goods  to  the 
consumer  and  so  enabling  the  American  pro- 
ducer to  get  higher  prices  for  his  own  than  he 
otherwise  could.  That  is  the  sole  object  of  pro- 
tection. A  duty  that  does  not  raise  prices  is  not 
protective.  The  ground  now  being  clear,  let  us 
see  what  effect  the  tariff  has  on  the  prosperity 
and  comfort  of  the  American  people. 


CHAPTER  II. 

CAN    A   NATION   TAX    ITSELF    RICH? 

Those  who  believe  in  a  tariff  for  protection 
say  that  it  improves  the  condition  of  the  people 
by  giving  higher  wages  to  workmen  and  greater 
profits  to  capitalists.  Before  we  consider  that 
point  it  will  be  well  to  see  what  effect  it  has  on 
the  nation  as  a  whole.  If  the  United  States 
can  produce  more  wealth  with  a  protective  tariff 
than  without  one,  then  it  will  be  possible  for 
each  citizen  to  get  more  in  the  general  division; 
but  if  less  be  produced,  there  is  less  to  divide, 
and  any  person  who  may  get  more  must  do  so 
at  the  expense  of  the  rest. 

Suppose  only  one  person  lived  in  the  United 
States.  If  he  were  left  to  himself  he  would 
engage  in  the  occupation  that  seemed  likely  to 
bring  him  the  greatest  returns  with  the  least 
exertion.  Perhaps  he  would  wash  out  gold  in 
the  bed  of  some  California  stream.  Once  a 
year  he  would  come  down  to  the  bay  and  buy 
what  goods  he  needed  from  some  passing  trader. 
The  United  States  would  be  exporting  gold 
and  importing  commodities — a  highly  danger- 
ous, if  not  ruinous,  process,  according  to  our 
domestic  school  of  political  economy.  But  if  it 
were  suggested  to  this  sole  American  citizen 
that  wisdom  required  him  to  make  everything 

for  himself,  and  that  he  should  prevent  himself 

10 


CAN    A    NATION    TAX    ITSELF    RICH?  11 

from  buying  anything  abroad,  by  artificially  rais- 
ing the  price  of  his  imports  so  that  he  would  have 
to  give  more  of  his  gold  for  the  same  amount  of 
commodities,  he  would  probably  fail  to  appre. 
ciate  the  value  of  the  advice.  He  would  say 
that  he  could  make  more  and  better  clothes, 
hats,  books,  guns,  powder,  shot,  fiddles,  coffee, 
tea  and  sugar  by  panning  out  gold  and  trading 
it  for  these  things  than  by  trying  laboriously  to 
make  each  article  for  himself.  In  other  words, 
the  United  States  could  acquire  more  wealth  by 
letting  trade  flow  in  its  natural  channels  than 
by  attempting  to  confine  it  to  the  home  market. 

Suppose,  now,  the  population  of  the  Union  to 
be  doubled.  Another  man  comes  in  and  settles 
down  by  the  gold  miner.  Instead  of  going  to 
work  with  a  pan  it  may  occur  to  him  that  he 
can  accomplish  more  by  putting  in  crops  of  grain 
and  vegetables  and  keeping  a  cow  and  some 
chickens.  Part  of  his  produce  will  give  him 
enough  to  eat  and  the  rest  he  can  sell  to  the 
miner.  Both  will  then  have  gold  to  send  abroad 
for  such  other  things  as  they  may  need.  In 
other  words,  the  United  States  will  continue  to 
export  gold,  but  it  will  import  more  manufac- 
tured goods  and  less  agricultural  produce. 

The  course  of  trade  is  still  perfectly  free,  and 
if  it  were  suggested  to  the  newcomer  that  he 
suffered  by  being  able  to  buy  foreign  goods  so 
cheaply,  that  he  was  engaged  in  a  degrading 
competition  with  the  pauper  labor  of  Europe, 
and  that  he  could  never  be  prosperous  until  he 
and  the  miner  were  compelled  to  cobble  up  their 
own  guns  and  shoes  and  do  all  their  trading 


12  THE    TARIFF. 

with  each  other,  he  would  be  incredulous.  He 
would  say  : 

"I  can  raise  enough  on  my  farm  in  a  part  of 
the  year  to  trade  for  everything  I  need  and  I 
have  the  rest  of  the  time  to  myself.  If  the 
miner  and  I  were  to  try  to  make  everything  we 
use,  we  should  have  to  work  all  day  and  every 
day  in  putting  together  rawhide  clothes,  ham- 
mering out  fishhooks  without  barbs,  and  botch- 
ing up  guns  that  would  blow  our  heads  off  the 
first  time  we  tried  to  fire  them,  and  a  good 
many  things  we  should  have  to  go  without 
altogether." 

It  would  be  hard  to  convince  either  inhabitant 
of  the  United  States  that  he  needed  any  inter- 
ference to  make  him  work  to  the  best  advant- 
age, or  that  he  had  anything  to  fear  from  a 
possible  "flood  of  cheap  foreign  goods." 

But  now  let  us  imagine  the  population  of  the 
country  to  be  still  further  increased.  A  third 
man  joins  the  farmer  and  the  miner,  and  looks 
about  him  for  something  to  do.  He  suggests 
that  weaving  woolen  cloth  would  suit  him  very 
well.  But  as  cloth  is  woven  in  large  quantities 
in  Europe  by  cheap  labor  and  improved  machin- 
ery, and  as  he  would  have  to  do  his  work  slowly 
with  a  hand  loom,  he  could  not  undertake  to  sell 
at  foreign  prices.  To  do  that,  he  might  say, 
would  be  to  bring  American  wages  down  to  the 
European  standard. 

"  Bind  yourselves  to  pay  me  three  times  as 
much  for  my  cloth  as  you  do  the  foreign  trader 
for  his  and  I  will  establish  this  new  industry 
among  you,  which  will  diversify  American 


CAN    A    NATION    TAX    ITSELF    RICH?  13 

labor,  furnish  a  home  market  for  your  products, 
and  keep  up  the  standard  of  living." 

The  farmer  and  miner  would  probably  reply  : 

"Where  do  we  come  in?  If  we  are  to  get 
only  a  third  as  much  cloth  for  the  same  amount 
of  labor,  our  wages  and  standard  of  living  will 
be  reduced.  If  you  take  three  parts  of  our  pro- 
duce and  return  us  one  part  of  its  value  your 
home  market  is  worth  exactly  as  much  to  us  as 
that  of  a  tramp  who  should  take  two  parts  and 
return  us  nothing  at  all.  The  country  is  open 
to  you  just  as  it  was  to  us.  Find  something  to 
do  that  is  worth  doing." 

Thus  admonished,  the  newcomer  might  think 
a  little  harder  and  perhaps  might  see  an  open- 
ing for  success  as  a  blacksmith,  carpenter  and 
general  tinker.  He  could  make  and  mend  tools, 
furniture  and  the  like  for  the  old  settlers,  and 
thus  save  them  much  valuable  time,  besides  do- 
ing better  work  than  they  could. 

And  so  the  process  would  go  on.  Each  new 
arrival  would  fit  into  the  place  where  he  could 
work  to  the  best  advantage.  Industries  would 
gradually  become  more  diversified.  When  a 
town  of  500  people  had  grown  up  there  would 
probably  be  a  mill  by  the  stream,  a  tannery,  a 
shoemaker,  a  tailor,  a  baker,  a  physician,  a 
teacher,  a  number  of  woodcutters,  herders  and 
other  workers  in  lines  that  had  to  be  conducted 
on  the  spot.  As  1,000,  10,000,  100,000  people 
came  in,  the  industries  would  constantly  broaden. 
Many  things  that  it  was  formerly  cheaper  to 
import  could  now  be  produced  more  cheaply  at 
home,  and  as  each  new  opportunity  arose  there 


14  THE    TARIFF. 

would  be  somebody  to  take  advantage  of  it. 
But  in  the  whole  time,  from  the  appearance  of 
the  first  settler  to  that  of  the  seventy-millionth, 
it  would  be  impossible  to  find  a  single  stage  at 
which  the  national  wealth  could  be  increased  by 
interfering  with  the  natural  course  of  trade  and 
compelling  citizens  to  deal  with  each  other  when 
they  could  deal  to  better  advantage  with  some- 
body else.  The  profit  of  the  whole  nation  is  the 
sum  of  the  individual  profits  of  the  persons  who 
compose  it.  If  each  of  these  persons  be  trading 
to  advantage  the  nation  is  trading  to  advantage. 
The  absurdity  of  trying  to  turn  this  trade  into 
unnatural  channels,  which  is  so  palpable  when 
we  are  dealing  with  one  man  or  two  men  or 
three,  is  equally  flagrant  when  we  are  dealing 
with  a  million.  The  nation  as  a  whole  cannot 
be  enriched  by  such  methods. 


CHAPTER  III. 

WHO    PROFITS   BY    THE    TARIFF  ? 

If  the  country  as  a  whole  does  not  profit  by  a 
protective  tariff,  who  does?  This  question  must 
be  answered  by  the  examination  of  particular 
cases.  Let  us  consider  the  United  States.  It 
is  clear  that  the  producers  of  such  things  as  are 
freely  exported  and  sold  in  the  world's  market 
are  not  helped  by  the  tariff.  In  this  class  are 
included  farmers,  millers,  cattle-raisers,  gold 
and  silver  miners  and  the  like.  A  second  un- 
protected class,  equally  large,  is  composed  of 
persons  engaged  in  personal  services,  in  trade 
and  transportation,  and  in  essentially  local  in- 
dustries, such  as  building  trades,  carpentry, 
blacksmithing,  teaching,  roadmaking,  tailoring 
and  printing.  Considering  now  the  compara- 
tively few  industries  directly  protected,  let  us 
look  first  at  the  effect  of  the  tariff  on  the  iron 
trades.  For  the  cheap  production  of  iron  certain 
conditions  must  exist  together.  There  must  be 
rich  beds  of  ore  easily  worked  and  situated  within 
convenient  distance  of  mines  of  good  smelting 
coal.  These  conditions  have  existed  in  the  past 
in  Scotland  and  the  north  of  England,  although 
they  are  now  becoming  less  favorable.  They 
are  found  to  perfection  in  Alabama  and  other 
Southern  States.  They  are  found  in  a  less  per- 
fect degree  in  Pennsylvania  and  other  parts  of 

15 


16  THE    TARIFF. 

America.  In  California  there  are  no  coal  or 
iron  mines  to  speak  of,  but  there  is  a  consider- 
able manufacture  of  finished  iron  products. 
Situated  as  he  is,  on  the  ocean,  with  an  immense 
wheat  fleet  coming  to  his  doors  in  ballast  every 
year,  the  Californian  manufacturer  might  have 
pig  and  scrap  iron  brought  to  him  from  abroad 
at  a  trifling  expense.  But  the  tariff  prevents. 
It  compels  him  to  buy  his  materials  in  Pennsyl- 
vania and  pay  high  freight  charges  for  carrying 
them  across  the  continent.  The  wheat-grower 
to  whom  he  sells  his  machinery  not  only  suffers 
directly  from  the  increased  cost,  but  indirectly 
through  the  high  freight  rates  he  is  obliged  to 
pay  on  his  wheat,  owing  to  the  lack  of  return 
cargoes  for  the  ships  that  carry  it  to  foreign 
markets.  Who  gets  the  benefit  of  all  this  ? 
Nobody.  The  extra  cost  is  absolutely  thrown 
away  and  lost  to  the  world.  It  is  expended  in 
working  against  nature  instead  of  with  her.  It 
is  absorbed  in  trying  to  make  water  flow  up  hill. 
Probably  the  larger  part  of  the  cost  of  the  tariff 
can  be  accounted  for  in  this  way.  It  is  simply 
a  wanton  burden  laid  on  industry  from  which 
nobody  derives  any  benefit.  The  wool  duties, 
as  will  be  shown  later,  are  of  this  description. 
They  cripple  the  American  woolen  manufacturer 
without  helping  the  grower.  Of  the  rest,  almost 
all  is  absorbed  by  a  few  owners  of  rich  natural 
opportunities.  There  is  only  one  quicksilver 
mine  of  importance,  for  instance,  in  the  United 
States.  The  owners  of  this  mine  pay  the  mar- 
ket rate  of  wages  to  their  men  and  pocket  what- 
ever may  be  added  to  the  price  of  quicksilver 


WHO    PROFITS    BY    THE    TARIFF?  17 

by  the  tariff.  There  is  only  one  important  nickel 
mine  in  the  country  and  that  is  owned  by  one 
man,  who  has  represented,  in  his  sole  person, 
all  the  benefits  of  protection  to  American  labor 
as  applied  to  nickel.  If  all  the  iron  mines  in 
the  country  belonged  to  a  single  owner  he  would 
derive  the  entire  benefit  from  the  duty  on  iron. 
As  it  is,  this  benefit  goes  to  the  proprietors  of 
the  richest  and  most  favorably  situated  mines. 
There  are  some  deposits  which  barely  pay  the 
cost  of  working,  even  at  the  highest  market 
price.  There  are  others  which  would  pay  at 
lower  prices.  There  are  still  others  that  would 
be  profitable  in  competition  with  any  in  the 
world.  Under  free  trade  the  first  would  have 
to  remain  closed  until  prices  went  up.  With 
prices  artificially  raised  by  protection  the  pro- 
prietors of  these  unfavorably  situated  mines  re- 
ceive simply  the  ordinary  rates  of  profit  on  capi- 
tal, while  the  owners  of  the  richer  deposits, 
selling  their  goods  at  the  same  figure,  are  enabled 
to  collect  double  and  triple  profits.  It  is  hardly 
necessary  to  say  that  these  differences  in  profits 
are  not  matched  by  any  corresponding  differences 
in  wages.  There  is  nothing  in  the  tariff  laws 
requiring  the  subsidized  mine-owners  to  divide 
their  profits  with  their  men,  and  they  do  not  do 
it. 

Where  domestic  competition  is  unchecked  the 
American  manufacturer  does  not  usually  gain 
by  the  tariff.  He  is  more  likely  to  lose.  His 
profits  may  be  temporarily  increased,  but  as 
soon  as  it  becomes  evident  that  he  is  getting 
more  than  the  usual  rates  competitors  rush  in 


18  THE    TARIFF. 

and  the  business  is  overdone.  Of  late,  how- 
ever, a  device  has  been  invented  which  gives 
manufacturers  some  of  the  advantages  pos- 
sessed by  the  holders  of  natural  monopolies. 
This  is  the  trust.  When  the  bulk  of  the 
capital  in  a  given  industry  is  combined  in  one 
huge  mass,  it  gains  the  power  to  shut  out  new 
competitors.  No  single  adventurer  can  enter 
the  field  it  has  pre-empted  with  any  hope  of 
success.  The  combination  can  put  up  the 
prices  of  the  articles  it  controls  to  a  point  just 
short  of  that  at  which  it  would  be  profitable  to 
import  them  and  pay  the  duties.  Should  the 
home  market  be  overstocked,  it  can  limit  pro- 
duction until  the  demand  at  the  highest  possi- 
ble prices  equals  the  supply. 

The  entire  benefit  of  the  tariff,  then,  goes  to 
the  people  who  possess  some  form  of  monopoly, 
either  natural  or  artificial.  It  cannot  possibly 
go  to  anybody  else.  And  since  protection,  by 
diverting  industry  from  natural  to  unnatural 
channels,  makes  the  total  product  of  the  na- 
tion less  than  it  would  otherwise  be,  it  follows 
that  if  some  people  get  more  than  they  would 
have  under  natural  conditions,  others  must 
have  very  much  less.  That  this  is,  in  fact,  the 
effect  of  the  tariff,  we  need  only  look  about  us 
to  see.  It  is  doubtful  if  the  whole  world  com- 
bined can  show  as  many  overgrown  millionaires 
as  the  United  States,  and  it  is  certain  that  in 
no  young  and  growing  country  can  the  working- 
man  save  as  small  a  proportion  of  his  wages  as 
here.  Great  fortunes  are  piling  up  from  genera- 
tion to  generation,  but  the  worker  who  con 


WHO    PROFITS   BY    THE   TARIFF? 


19 


gratulates  himself  upon  his  high  wages  and  looks 
pityingly  upon  the  pauper  labor  of  Europe, 
finds  that  it  takes  every  cent  of  his  earnings  to 
pay  his  living  expenses,  and  when  he  dies  his 
lodge  has  to  bury  him. 


CHAPTER  IV. 

THE    TARIFF    AND    WAGES. 

Wages  are  fixed  by  two  considerations — what 
the  employer  can  pay  and  what  he  must.  The 
average  employer  pays  his  men  just  as  little  as 
they  will  accept,  but  he  cannot  permanently  pay 
them  more  than  the  business  produces.  If  the 
owner  of  a  farm  should  possess  a  borax  deposit 
from  which  an  able-bodied  man  could  dig  up  a 
dollar's  worth  of  borax  a  day,  he  could  not  afford 
as  a  steady  business  to  hire  a  man  to  do  the 
work  at  $2  a  day.  Neither  could  he  reduce  the 
market  rate  of  wages  in  that  locality  from  $2  to 
$1  or  75  cents.  He  would  simply  have  to  wait 
until  the  price  of  borax  went  up  high  enough  to 
enable  him  to  attract  labor  from  other  occupa- 
tions. On  the  other  hand,  if  his  deposit  were  so 
rich  that  one  man  could  dig  out  fifty  dollars' 
worth  of  borax  a  day,  the  owner  would  not  pay 
$50  in  wages.  He  might  be  able  to  afford  to 
pay  that  much,  better  than  he  could  have 
afforded  in  the  former  case  to  pay  $2,  but  he 
would  not  do  it.  He  would  pay  the  market  rate 
and  pocket  the  difference.  Of  course  it  makes 
no  difference  to  what  cause  the  higher  value  of 
the  bed  of  borax  is  due.  Suppose  it  to  be  due  to 
a  tariff.  Suppose  it  to  be  possible  to  levy  duties 
that  would  raise  the  price  of  the  borax  one  man 
can  dig  in  a  day  from  $1  to  $10.  The  owner  of 

30 


THE    TARIFF   AND    WAGES.  21 

the  deposit  would  get  the  entire  benefit.  He 
would  pay  the  standard  rate  of  wages  and  no 
more.  Just  as  no  laborer  would  think  of  work- 
ing for  him  when  his  returns  did  not  permit  him 
to  offer  the  market  price,  so  no  one  would  think 
of  asking  for  a  share  in  his  profits  when  they 
went  above  that  rate.  The  consumers  of  borax 
would  pay  more  for  what  they  used,  but  labor 
would  gain  nothing  by  the  change. 

Since  wages  are  paid  out  of  products,  the  total 
amount  paid  in  wages  in  any  locality  cannot 
permanently  exceed  the  total  amount  produced 
by  labor  in  that  locality,  and  may  be  as  much 
less  as  the  employers  can  induce  the  laborers  to 
take.  How  much  this  will  be  depends  upon  the 
number  of  men  seeking  employment  compared 
with  the  opportunities  for  labor.  With  trade 
left  free,  it  is  clear  that  capital  would  first  turn 
to  those  enterprises  that  are  naturally  most  pro- 
ductive and  would  then  take  up  other  industries 
in  the  order  of  their  advantages.  The  total  pro- 
duction, and  consequently  the  wage-paying 
capacity,  would  necessarily  be  at  the  highest 
possible  point.  Any  interference  by  the  Gov- 
ernment, by  diverting  industry  to  less  pro- 
ductive employments,  would  inevitably  reduce 
the  amount  available  for  the  payment  of  wages. 
Unless,  therefore,  the  workmen  could  force  their 
employers  to  give  them  a  larger  share  of  this 
smaller  product,  they  would  have  to  submit  to 
a  reduction  in  their  earnings.  Could  a  tariff 
furnish  any  lever  that  would  enable  laborers  to 
force  such  a  division?  Clearly  not.  No  tariff 
law  says  anything  about  wages.  It  simply 


22  THE   TARIFF. 

authorizes  people  who  have  goods  to  sell  to 
charge  more  for  them  than  they  otherwise  could. 
It  does  not  require  them  to  pay  any  part  of  this 
higher  price  to  their  workmen.  Labor  is  free, 
and  we  import  as  much  of  it  every  two  years  as 
is  employed  in  all  our  protected  industries  put 
together. 

Under  protection,  as  under  free  trade,  em- 
ployers pay  just  as  little  to  their  workmen  as 
they  can.  But  protection  gives  them  opportu- 
nities for  beating  their  men  down  which  they 
would  not  have  under  free  trade.  The 
Pennsylvania  coal-mine  combination,  for  in- 
stance, in  order  to  keep  up  the  price  of  coal, 
systematically  reduces  the  output  of  its  mines. 
If  there  were  no  duty  on  coal  the  trust  would 
be  compelled  to  keep  the  market  supplied  or  see 
it  taken  by  foreigners.  Diminished  production 
means  the  employment  of  fewer  men,  and  that 
means  more  competition  for  the  places  that  are 
open,  and  consequently  a  depressing  effect  upon 
wages.  Moreover,  the  high  price  of  coal  tends 
to  cripple  manufacturing  industries  all  over  the 
country,  and  so  injures  the  demand  for  labor  in 
every  direction. 

What  we  might  naturally  expect  we  find  by 
experience  to  be  true.  It  is  a  general  rule  that 
the  protected  industries  pay  the  lowest  wages. 
There  are  a  few  exceptions,  as  in  the  case  of 
glass-blowers  and  iron-puddlers,  but  not  many. 
It  is  the  unprotected  blacksmith,  bricklayer, 
plasterer,  carpenter,  longshoreman,  painter  and 
engineer  that  keep  up  the  rate  of  wages  and 


THE    TARIFF   AND   WAGES.  23 

the  protected  spinner,  weaver  and  coal  miner 
that  tend  to  press  it  down. 

For  each  article  there  is  a  certain  price,  above 
which  it  cannot  be  sold  to  advantage.  When 
more  is  asked  people  will  go  without  it.  It  is 
necessary,  therefore,  without  any  regard  to 
foreign  competition,  that  the  price  should  be 
kept  within  this  figure.  To  do  this  the  manu- 
facturer must  be  able  to  keep  down  the  cost  of 
his  materials  or  of  his  labor,  or  of  both.  If  he 
pay  more  for  one  he  must  get  the  other  for  less. 
It  follows,  therefore,  that  dear  materials  mean 
cheap  labor,  and  that  to  be  able  to  pay  well  for 
labor,  materials  must  be  had  cheaply.  The  re- 
cent researches  of  the  Massachusetts  Bureau 
of  Labor  Statistics  show  that  in  many  indus- 
tries of  that  State  the  cost  of  labor  is  less  than 
one-fifth  of  the  total  cost  of  production.  Sup- 
pose it  to  be  even  one-half,  it  is  clear  that  if 
the  materials  which  absorb  the  other  half  are 
taxed  fifty  or  one  hundred  per  cent  there  will 
have  to  be  either  a  cut  in  wages  or  such  an  in- 
crease in  the  price  of  the  finished  product  that 
many  people  will  refuse  to  buy  it,  thus  causing 
a  restriction  in  the  market  which  is  certain  to 
throw  numbers  of  men  out  of  employment. 

It  is  evident,  therefore,  that  a  tariff  could  not 
raise  wages,  even  if  it  were  applied  evenly  all 
round  and  everybody  had  a  fair  chance  at  its 
alleged  benefits.  Its  depressing  effect  would 
not  be  as  marked  then  as  it  is  now,  but  it  would 
exist  nevertheless.  The  burden  would  press 
more  evenly,  but  it  would  be  a  burden  still. 
But,  as  a  matter  of  fact,  there  is  scarcely  a  pre- 


24  THE    TARIFF. 

tense  of  laying  protective  taxes  evenly.  The 
protected  classes  include  only  about  one  in 
twenty  of  the  population.  The  other  nineteen 
pay  the  cost  of  protection  and  receive  none  of 
its  advantages,  such  as  they  are.  This  is  a 
point  that  needs  to  be  exhibited  in  detail, 
and  it  will  receive  fuller  treatment  in  a  later 
chapter. 


CHAPTER  V. 

THE   TARIFF   AND    CALIFORNIA. 

In  every  State  the  bulk  of  the  people  are  in- 
jured by  tariff  taxes,  but  California  is  an  es- 
pecial sufferer.  This  may  not  seem  to  fit  in 
very  well  with  the  fact  that  protection  is  more 
strongly  rooted  among  Californians  than  among 
the  people  of  any  other  State,  unless  it  be  Penn- 
sylvania, but  a  little  examination  will  show  it  to 
be  the  truth. 

There  are  very  few  products  of  this  State 
which  can  be  directly  protected.  When  we 
have  mentioned  raisins,  wine,  oranges,  lemons, 
prunes,  sugar  and  wool  we  have  named  about 
all  of  importance.  All  of  these  combined  do 
not  equal  in  value  the  single  item  of  wheat, 
which  is  entirely  unprotected,  or  of  gold,  which 
the  tariff  expressly  aims  to  depress.  It  may  be 
said  that  lumber  can  be  and  is  protected, 
but  California  has  a  monopoly  of  the  world's 
supply  of  redwood,  and  has  no  competitor  to 
fear  from  any  quarter,  while  the  pine  of  the 
Sierras  has  a  local  market  cut  off  by  high 
freight  charges  from  the  competition  of  the 
coast. 

Raisins  can  be  produced  in  California  more 
cheaply  and  abundantly  than  in  any  other  part 
of  the  world.  Our  growers  have  already 
proved  that  they  can  compete  with  the  Span- 

25 


26  THE    TARIFF. 

iards  in  Australia,  England  and  France,  and  it 
would  not  be  surprising  in  time  to  see  them  ship 
raisins  to  Spain  itself.  Soil,  climate,  water  and 
scientific  curing  and  packing — not  the  tariff- 
are  what  California  has  to  depend  upon  in  this 
line.  One  of  the  leading  dealers  in  San  Fran- 
cisco says  "that  the  shipments  of  Spanish 
raisins  are  decreasing  from  year  to  year,  so  that 
the  Malaga  raisin  scarcely  enters  into  competi- 
tion with  the  California  product."  When  the 
vineyards  already  planted  in  Fresno  County  are 
in  full  bearing  we  shall  be  producing  more 
raisins  than  are  produced  in  all  the  world  at  the 
present  time,  and  then  prices  will  be  determined 
by  the  competition  of  Californians  with  each 
other,  and  not  with  foreigners.  Viticultural 
Commissioner  West  asserts  that  within  five 
years,  without  any  further  planting,  we  shall 
be  raising  7,600,000  boxes  of  raisins  a  year,  of 
which,  at  present  prices,  we  .cannot  hope  to  sell 
more  than  4,000,000  boxes  in  the  United  States. 
The  other  3,600,000 — or,  according  to  the  census 
estimate,  6,000,000 — boxes  must  be  marketed 
abroad,  or  else  a  new  American  market  must  be 
built  up  among  the  poor.  Tariff  duties  will  not 
help  our  growers  to  do  this — the  only  thing 
that  can  help  them  will  be  the  removal  of  the 
taxes  they  are  now  compelled  to  pay. 

Our  oranges  find  their  only  serious  competi- 
tors in  Florida.  The  Mediterranean  and  Tahiti 
oranges  come  into  market  at  a  season  in  which 
none  of  our  own  are  to  be  had.  It  is  an  advant- 
age to  Californians  themselves  to  be  able  to  buy 
cheap  fruit  at  these  times. 


THE    TARIFF    AND    CALIFORNIA.  27 

As  to  our  wine,  the  question  is  not  one  of 
price,  but  of  taste.  People  drink  French  wine, 
or  at  least  wine  with  French  labels,  because  it 
is  fashionable.  They  pay  more  for  it  than  they 
would  have  to  pay  for  the  pure  California  arti- 
cle, and  the  fact  that  it  is  more  expensive  rather 
recommends  it  to  them.  However,  it  is  need- 
less to  consider  the  effect  of  a  removal  of  the 
wine  duties,  because  wine  is  one  of  the  luxuries 
which  both  parties  agree  should  be  taxed,  and 
therefore  the  duties  will  remain  whether  we 
have  a  tariff  for  protection  or  one  for  revenue. 

Our  prunes  fill  a  place  of  their  own,  and  one 
that  is  comparatively  little  affected  by  foreign 
competition.  The  bulk  of  our  imports  in  that 
line  consists  of  cheap  Turkish  prunes,  which  are 
sold  at  two  or  three  cents  a  pound  and  eaten  by 
poor  people  who  cannot  afford  to  pay  California 
prices.  The  duty  of  two  cents  a  pound  does  not 
begin  to  bring  this  class  of  fruit  up  within  sight 
of  California  prunes,  and  any  duty  that  did 
would  merely  deprive  the  poor  of  the  cheap  food 
to  which  they  are  accustomed  without  helping 
the  California  grower.  Our  prunes  stand  on 
their  own  merits  and  command  the  trade  of 
people  who  can  afford  to  pay  for  a  choice  arti- 
cle. 

Sugar  is  one  of  the  articles  upon  which  a 
revenue  tariff  would  have  retained  a  moderate 
tax,  but  as  the  McKinley  bill  abolished  the  duty 
on  it  it  is  not  likely  that  it  can  be  restored.  If 
our  home  production  increases  to  anything  like 
a  sufficient  extent  to  supply  the  home  market 
the  bounty  S3rstem  will  break  down  of  its  own 


28  THE    TARIFF. 

weight.  The  people  will  never  consent  to  tax 
themselves  $250,000,000  a  year  to  be  paid  to 
private  persons  in  the  two  items  of  pensions  and 
sugar. 

The  hollowness  of  the  protection  afforded  by 
the  duties  on  wool  has  been  pretty  well  exposed. 
We  send  no  wool  to  foreign  countries,  and  con- 
sequently our  growers  must  find  their  market  at 
home,  if  anywhere.  That  market  is  furnished 
solely  by  the  woolen  mills.  Unless  we  have  a 
number  of  flourishing  mills  we  can  have  no  sale 
for  wool.  Now  the  wool  tariff  has  destroyed 
our  woolen  mills.  A  few  years  ago  there  were 
three  factories  of  the  kind  in  San  Francisco. 
Now  there  is  one,  and  that  is  run  at  a  loss. 
During  the  last  Presidential  campaign  it  was 
announced  that  if  Cleveland  were  elected  the 
Pioneer  Mills  would  have  to  shut  down.  Har- 
rison was  elected  and  the  Pioneer  Mills  shut 
down.  So  did  the  Santa  Rosa  mill.  The  suc- 
cessful manufacture  of  woolen  goods  requires 
foreign  wool  to  mix  with  the  domestic  article. 
When  this  can  be  had  on  good  terms  the  manu- 
facturers can  afford  to  pay  a  good  price  for 
domestic  wool.  When  it  cannot  be  obtained 
they  cannot  buy  the  domestic  wool  at  all,  except 
for  limited  classes  of  goods. 

The  great  bulk  of  Calif  ornian  industries  receive 
nothing  but  injury  from  the  tariff.  Our  wheat 
crop  is  worth  from  $20,000,000  to  $50,000,000  a 
year.  The  wheat-growing  districts  are  stand- 
ing still  because  farming  does  not  pay.  If  this 
were  the  result  of  natural  laws  the  rancher 
might  bear  his  fate  with  resignation ;  but  it  is 


THE    TARIFF    AND    CALIFORNIA.  29 

not  natural.  The  Government  takes  a  third  of 
every  crop,  either  for  itself  or  for  some  favored 
monopoly.  It  does  more.  It  demands  money 
from  the  farmer  whether  he  has  a  crop  or  not. 
He  must  have  clothes,  tools,  harness,  furniture 
and  household  goods,  even  if  his  failure  to  raise 
any  grain  relieves  him  from  the  necessity  of 
buying  taxed  bags.  There  is  no  deduction  from 
the  taxes  on  these  things  on  account  of  his  mis- 
fortunes. So  the  farmer  has  to  borrow,  and  then 
he  worries  about  the  interest  and  is  ready  to 
subscribe  to  wild  schemes  for  having  the  Gov- 
ernment lend  him  some  of  the  money  of  which 
it  has  robbed  him  and  take  a  mortgage  on  his 
place  for  security.  If  he  had  been  allowed  to 
keep  what  he  honestly  earned  he  could  have 
saved  enough  in  good  years  to  tide  him  over  bad 
ones  without  going  into  debt.  Taking  one  year 
with  another,  the  California  wheat-growers 
probably  lose  $10,000,000  through  the  tariff— a 
sum  that  would  easily  support  50,000  people. 

The  population  of  the  mining  counties  has 
been  steadily  declining  for  the  past  thirty  years. 
The  production  of  gold,  which  was  once  $65,- 
000,000  a  year,  has  fallen  off  to  a  fifth  of  that 
amount,  but  it  is  still  sufficient  to  make  mining 
the  second  industry  in  importance  in  the  State. 
The  tariff  is  directly  aimed  at  the  miners.  Its 
object  is  to  make  prices  high — that  is,  to  make 
gold  and  silver  buy  less  than  they  otherwise 
would.  High  prices  for  goods  mean  low  prices 
for  gold  and  silver.  We  saw  what  an  effect  the 
little  flurry  that  followed  the  passage  of  the  Sil- 
ver bill  had  in  opening  new  mines.  If  the  value 


30  THE    TARIFF. 

of  the  precious  metals  were  advanced  twenty  or 
twenty-five  per  cent,  as  it  would  be  by  the  re- 
moval of  the  taxes  that  keep  it  down,  we  should 
see  the  old  deserted  mining  towns  of  California 
peopled  again. 

Our  manufactures  will  be  weak  and  strug- 
gling as  long  as  their  materials  are  extrava- 
gantly taxed.  We  have  hardly  any  coal  or  iron 
of  our  own,  and  to  have  successful  manufac- 
tures we  must  be  allowed  to  buy  such  things  as 
cheaply  as  possible.  Otherwise,  these  indus- 
tries will  be  driven  to  points  that  do  not  have 
to  depend  upon  foreign  supplies. 

But  the  most  important  thing  to  California, 
and  especially  to  San  Francisco,  is  commerce. 
This  is  a  commercial  city.  It  would  not  have 
been  built  where  it  is  but  for  its  advantages  for 
foreign  trade.  And  California  is  a  commercial 
State.  It  is  not  one  of  those  comfortable,  easy- 
going districts  that  produce  just  about  enough 
for  their  own  people — where  every  farmer  has  a 
potato  patch  and  a  bit  of  pasture  and  a  wood 
lot — where  the  miller  grinds  his  neighbors' 
grist  and  the  village  shoemaker  keeps  his 
townsmen  shod  with  leather  turned  out  by  the 
tanner  up  the  creek,  from  the  hides  of  the  cattle 
raised  just  over  the  hill  and  killed  by  the 
butcher  who  peddles  meat  from  a  home  made 
wagon.  California  does  things  on  a  large  scale. 
With  only  1,200,000  people  it  produces  things 
enough,  of  some  kinds,  for  20,000,000  or  more. 
It  would  take  five  million  people  to  consume 
an  average  California  wheat  crop,  ten  million  to 
consume  a  prune  crop  and  fifteen  million  for  an 


THE   TARIFF   AND    CALIFORNIA,  31 

orange  crop.  California  now  produces  enough 
raisins  for  50,000,000  people  and  will  soon  pro- 
duce enough  for  100,000,000.  Her  ordinary 
vintage  is  equal  to  the  wine-drinking  capacity 
of  30,000,000  Americans,  although  it  would  not 
supply  a  million  Frenchmen.  She  mines  gold 
enough  for  the  coinage  demands  of  20,000,000 
people. 

It  is  necessary,  therefore,  to  send  off  the  sur- 
plus and  get  something  in  exchange  for  it. 
Now,  it  so  happens  that  California  is  very  con- 
veniently situated  for  selling  to  and  buying 
from  foreign  countries,  but  very  badly  situated 
for  dealing  with  the  Eastern  States.  When 
fruit  is  sent  East  the  profits  are  almost  eaten 
up  by  freight  charges,  even  with  prices  raised 
so  high  with  the  help  of  duties  that  the  masses 
of  the  people  cannot  buy,  and  the  market  is 
consequently  limited  to  the  well-to-do,  while 
wheat  cannot  be  shipped  East  at  all.  Our  gold 
would  buy  more  in  almost  any  market  of  the 
civilized  world  than  it  can  in  New  York  or 
Pennsylvania,  and  the  things  it  bought  could 
be  shipped  here  with  less  loss  from  freight 
charges.  The  laws  that  seek  to  confine  us  to 
the  American  market  cut  us  both  ways — on 
what  we  sell  and  on  what  we  buy.  Besides, 
there  are  some  things  that  we  practically  can- 
not sell  in  the  so-called  home  market  at  all. 
The  Eastern  States  do  not  want  our  wheat. 
They  raise  more  than  they  need  themselves. 
We  must  ship  the  bulk  of  our  crop  abroad  and 
take  our  pay  in  goods.  Even  if  it  were  pos- 
sible, as  a  general  rule,  for  a  community  to  sell 


32  THE    TARIFF. 

without  buying,  which  it  is  not,  it  would  not  be 
possible  in  our  case,  because  gold  is  one  of  the 
commodities  we  produce  and  export.  We  have 
to  sell  our  surplus,  both  of  gold  and  of  goods, 
for  other  goods.  But  before  we  can  get  the 
benefit  of  the  things  we  have  paid  for,  Mr.  Mc- 
Kinley  makes  us  give  up  to  the  Government 
over  half  their  value  as  a  fine  for  not  having 
bought  them  of  Pennsylvanian  manufacturers, 
who  do  not  buy  from  us  and  with  whom  natural 
obstacles  forbid  us  to  make  a  profitable  trade. 
But  we  have  had  the  satisfaction  for  a  few 
years,  and  may  possibly  have  for  a  year  or  two 
longer,  until  our  new  trees  and  vines  are  in 
bearing,  of  depriving  the  poor  in  the  East  of 
the  privilege  of  eating  raisins,  prunes  and 
oranges,  in  order  that  the  well-to-do  might  be 
made  to  pay  a  fraction  of  a  cent  a  pound  above 
the  market  price  to  our  growers  and  two  or 
three  cents  to  middlemen.  That  is  all  we  get 
in  return  for  the  millions  of  dollars  the  tariff 
costs  us  every  year. 


CHAPTER  VI. 

THE    TARIFF   AND    COMMERCE. 

In  all  ages  one  of  the  most  profitable  pursuits 
in  which  a  nation  could  engage  has  been  that 
of  foreign  trade.  The  trading  countries  have 
always  been  the  richest  countries.  The  Phoe- 
nicians, Carthaginians  and  Athenians  were  the 
great  traders  of  ancient  times  and  the  great 
gatherers  of  wealth.  Sparta  discouraged  trade 
and  remained  poor.  In  the  Middle  Ages,  Ven- 
ice, Genoa  and  the  Hanse  towns  were  built  on 
commerce,  and  heaped  up  vast  riches.  The 
Netherlands  followed,  and  then  England.  We 
ourselves  have  had  a  share  in  the  profits  of  for- 
eign exchanges.  In  the  first  half  of  the  present 
century  the  Yankee  merchant  was  the  most  dar- 
ing, enterprising  and  successful  trader  of  the 
world. 

If  we  ask  how  commerce  may  be  encouraged 
there  may  be  various  answers.  Some  may  say 
that  we  should  pay  bounties  to  ship-owners,  or 
spend  money  in  dredging  out  harbors  and  build- 
ing light-houses.  But  if  we  ask  how  commerce 
may  be  discouraged  there  can  be  no  disagree- 
ment about  the  answer.  Everybody  will  say 
that  whatever  hampers  commerce  and  makes  it 
harder  to  carry  on  is  a  discouragement  to  it. 
Now  this  is  exactly  what  the  tariff  is  meant  to 
do,  and  does  do.  Suppose  the  Government 


34  THE    TARIFF. 

should  build  a  wall  across  New  York  harbor,  so 
that  every  ship  entering  would  have  to  stop  in 
the  lower  bay  and  transfer  its  cargo  to  another 
vessel.  Or  suppose  it  should  pass  a  law  requir- 
ing every  cargo  landed  to  be  loaded  into  wag- 
ons and  hauled  three  times  around  the  city  be- 
fore being  offered  for  sale.  These  things  would 
certainly  be  a  hindrance  to  commerce,  and  no- 
body in  his  senses  would  propose  them;  yet  they 
would  act  precisely  as  the  tariff  does,  and  could 
be  defended  by  precisely  the  same  arguments. 
They  would  make  foreign  goods  cost  more,  and 
that  is  what  duties  do  and  are  intended  to  do. 
They  would  give  employment  to  American  labor, 
not  only  in  the  manufacture  of  the  things  that 
compete  with  foreign  goods,  but  in  the  construc- 
tion and  repair  of  the  wall,  the  loading  and  un- 
loading of  the  ships,  and  the  driving  of  the  wag- 
ons. In  fact,  this  plan  would  carry  out  the  idea 
of  protection  so  much  better  than  the  method  of 
duties  that  every  sincere  protectionist  ought  to 
favor  it. 

Now,  let  us  see  what  the  actual  amount  of 
tariff  obstruction  to  commerce  is.  In  the  year 
1881  our  imports  amounted  to  $642,664,628,  and 
our  exports  to  $902,377,346.  In  the  year  1891 
our  imports  were  $844,916,196,  and  our  exports 
$884,480,810.  Thus,  while  our  population  in- 
creased from  51,000,000  to  63,000,000,  our  for- 
eign trade  scarcely  increased  at  all,  and  what 
growth  there  was  was  entirely  in  imports.  We 
sold  less  in  1891  than  in  1881.  For  the  last  ten 
years  we  have  been  standing  still  in  the  matter 


THE    TARIFF    A.ND    COMMERCE.  35 

of  commerce  while  other  countries  have  been 
leaping  ahead. 

How  is  it  in  England  ?  While  we  buy  and  sell 
on  an  average  $25  worth  of  goods  per  head 
of  our  population  Great  Britain  buys  and  sells 
$92  worth.  With  only  39,000,000  inhabitants 
her  foreign  trade  amounted  to  $3,616,558,513 
in  1889  against  $1,729,397,006  for  our  63,- 
000,000  people  in  1891.  Little  Holland  with 
4,500,000  inhabitants — about  as  many  as  are  in 
the  States  of  Missouri  and  Iowa — has  a  com- 
merce more  than  half  as  great  as  that  of  the 
United  States.  Her  foreign  trade  amounts  to 
$940,000,000  a  year,  or  $209  per  head.  New 
South  Wales,  with  1,000,000  people,  has  a 
foreign  trade  reaching  $225,000,000  a  year,  or 
$225  per  capita — nine  times  that  of  the  United 
States.  Belgium,  with  the  population  of  New 
York  and  less  than  the  area  of  Maryland,  has 
imports  and  exports  amounting  annually  to 
$582,000,000,  or  more  than  a  third  as  much  as 
those  of  the  whole  American  Union.  Austria. 
Bulgaria,  Italy,  Portugal,  Roumania,  Russia, 
Servia,  Spain,  and  a  few  Spanish  American  re- 
publics are  the  only  civilized  countries  in  the 
world  which  do  not  surpass  the  United  States 
in  the  proportion  of  commerce  to  population. 

But  it  may  be  asked  why  duties  on  imports 
should  interfere  with  exports.  If  we  can  pro- 
duce anything  well  and  cheaply,  why  should  we 
not  be  able  to  send  it  abroad  and  sell  it  for 
cash,  whether  we  buy  anything  or  not  ?  '.There 
are  several  reasons  why  we  cannot.  In  the 
first  place  the  ships  which  take  our  goods  away 


36  THE    TARIFF. 

have  to  come  here  to  get  them.  If  they  can 
bring  cargoes  that  will  pay  the  cost  of  sailing 
one  way,  they  need  charge  only  enough  freight 
on  the  outward  cargoes  to  pay  for  the  outward 
voyage.  If  they  are  obliged  to  come  here 
empty  they  must  charge  enough  on  the  things 
they  carry  away  to  pay  their  expenses  both 
ways.  This  would  make  our  goods  cost  so 
much  when  they  reached  the  foreign  markets 
that  there  would  not  be  much  chance  of  selling 
them  in  competition  with  others  that  had  only 
ordinary  freights  to  pay.  In  the  next  place  the 
duties  on  imports  raise  the  cost  of  almost 
everything  we  produce.  Without  them  at  least 
a  hundred  bushels  of  wheat  could  be  raised  for 
what  it  takes  to  raise  eighty  bushels  now. 
Machinery,  canned  goods,  watches,  agricultural 
implements — practically  all  the  things,  in  fact, 
that  we  might  offer  for  sale — are  burdened  at 
the  start  with  a  heavy  load  of  taxation  on  which 
interest  and  profits  must  be  paid.  The  foreign 
competitor  who  is  not  so  burdened  has  a  long 
start  of  us  in  the  race  for  a  customer.  Lastly, 
and  most  important  of  all,  if  we  refused  to  buy 
from  the  rest  of  the  world  we  could  not  sell  even 
if  we  had  no  extra  freight  to  pay  and  if  our 
goods  were  as  cheap  in  the  beginning  as  those 
of  any  other  country.  The  total  foreign  trade 
of  the  world  is  about  $18,000,000,000  a  year. 
The  domestic  trade  is  many  times  greater.  To 
carry  on  this  vast  commerce  the  world  makes 
use  of  about  $7,600,000,000  in  gold  and  silver. 
It  is  plain  that  this  would  give  out  in  six  months 
if  coin  had  actually  to  be  sent  from  one  country 


THE    TARIFF    AND    COMMERCE.  37 

to  another  to  pay  for  the  imports.  The  entire 
fabric  of  modern  commerce  is  built  on  the  fact 
that,  on  the  whole,  things  bought  are  paid  for  by 
things  sold.  Gold  and  silver  are  used  only  for 
settling  the  small  balances  that  may  be  left. 
The  transfer  of  even  so  small  an  amount  as 
$20,000,000  at  one  time  in  actual  gold  or  silver 
from  one  country  to  another  is  thought  so  seri- 
ous an  event  in  the  commercial  world  that 
bank  directors  meet  to  consider  it  and 
the  mercantile  journals  devote  their  space  to 
discussing  its  cause.  When  gold  is  flowing 
from  London  in  unusual  quantity  the  Bank  of 
England  raises  its  rate  of  discount  to  check  it. 
Whenever  the  trade  of  any  country  appears 
one-sided  the  fact  is  due  to  some  peculiar  cir- 
cumstance which  makes  an  apparent  uneven- 
ness  necessary  to  preserve  a  real  balance  and 
prevent  a  flow  of  coin.  Thus  the  imports  of 
England  always  greatly  exceed  the  exports. 
This  is  due  to  the  fact  that  almost  all  the  rest 
of  the  world  is  in  debt  to  England  for  money 

Jent   or   for   freight  charges   on   British   ships. 

^These  debts  are  paid  in  goods  instead  of  in 
money.  India,  on  the  other  hand,  always  ex- 
ports vastly  more  than  she  imports.  This  does 
not  mean  that  she  is  growing  rich,  as  protec- 
tionists might  claim.  It  means  exactly  the  re- 
verse. It  means  that  she  is  called  on  every  year 
to  send  about  $70,000,000  to  England  in  the  way 
of  official  salaries  and  interest  on  bonds,  and 
that  she  sends  it  in  commodities  because  she 
could  not  possibly  continue  for  any  length  of 
time  to  send  it  in  gold  or  silver.  In  the  United 


38  THE    TARIFF. 

States,  during  the  war  and  for  some  time  after, 
our  imports  exceeded  our  exports.  That 
meant  that  we  were  borrowing  money  in 
Europe,  which  came  over  here  in  the  form 
of  goods.  Since  then  our  exports  have  been 
greater  than  our  imports.  That  means  that 
we  have  been  paying  our  debts.  The  excess  of 
exports  is  less  now  than  it  was  a  few  years  ago. 
That  means  that  the  debts  are  nearly  paid  and 
that  we  are  approaching  a  natural  balance  of 
trade. 

Now,  if  we  can  imagine  it  possible  to  carry 
out  the  protectionist  idea  of  selling  everything 
and  buying  nothing  we  could  produce  ourselves, 
what  would  be  the  effect  ?  If  we  imported  su- 
gar and  tropical  products  to  the  value  of  $300,- 
000,000  a  year  and  exported  manufactures, 
breadstuffs  and  provisions  to  the  value  of 
$1,000,000,000,  there  would  be  a  balance  of 
$700,000,000  coming  to  us  in  cash.  If  this  pro- 
cess could  be  kept  up  for  six  months  the  whole 
outside  world  would  be  wrecked  in  the  most  tre- 
mendous financial  crash  known  to  history.  Every 
country  outside  of  the  United  States  would  be 
drained  of  money,  there  would  be  universal 
bankruptcy,  the  bottom  would  drop  out  of  prices 
and  there  would  be  no  market  for  anything. 
Meanwhile  the  United  States  would  have 
enjoyed  a  few  months  of  wild  speculation,  like 
that  which  follows  an  unlimited  issue  of  paper 
money.  Then  with  the  sudden  loss  of  the  for- 
eign markets  there  would  be  a  glut  of  products 
here,  our  gold  would  leave  us  as  quickly  as  it 
had  come,  and  we  should  be  plunged  into  a 


THE    TARIFF    AND    COMMERCE.  39 

common  ruin  with  the  rest  of  the  world.  When 
things  finally  began  to  pick  up  again  we  should 
settle  down  to  a  modest  little  trade  in  which  we 
should  sell  about  enough  to  pay  for  our  $300,- 
000,000  worth  of  sugar,  bananas  and  dye  stuffs. 
Our  farmers  would  have  lost  their  vast  foreign 
market,  and  our  shipping  would  be  even  deader 
than  it  is  now. 

Of  course,  things  could  not  proceed  to  such 
an  extremity  as  this.  If  the  experiment  of  cut- 
ting off  imports  were  actually  tried,  the  sensi- 
tive foreign  exchanges  would  respond  before 
everything  had  gone  to  wreck.  Our  exports 
would  dry  up  and  disappear  along  with  the  im- 
ports, and  there  would  be  no  sudden  surge  of 
the  world's  supply  of  money  across  the  Atlantic 
and  back  again.  Protection,  carried  to  its  logi- 
cal end,  would  simply  wither  up  commerce  and 
force  the  men  engaged  in  that  industry  into 
other  occupations,  which  is  what  it  is  designed 
to  do. 


CHAPTER  VII. 

THE  HAWAIIAN  OBJECT  LESSON. 

Sixteen  years  ago  our  trade  with  the  Ha- 
waiian Islands  was  small  and  sickly.  In  the 
fiscal  year  1876,  the  last  before  the  reciprocity 
treaty  went  into  effect,  we  sold  the  Hawaiians 
goods  to  the  amount  of  $809,257,  which  was 
less  than  we  had  sold  them  three  or  four  years 
before.  The  trade  of  the  islands  was  gradually 
drifting  toward  Melbourne  and  Sydney.  We 
bought  Hawaiian  goods  to  the  extent  of  $1,382,- 
592.  Of  this  trade  $1,126,630  worth  of  imports 
and  $641,743  worth  of  exports  went  through 
San  Francisco.  Twenty-two  American  vessels 
in  the  Hawaiian  trade,  of  a  tonnage  of  7,448, 
entered  at  this  port,  and  thirty,  of  12,123  tons, 
cleared.  The  total  American  tonnage  in  the 
foreign  trade  at  the  port  of  San  Francisco  in 
that  year  was  342,318  entered  and  430,862 
cleared,  so  that  Hawaiian  commerce  gave  em- 
ployment to  about  one-fortieth  of  the  American 
ships  trading  from  this  port  to  foreign  coun- 
tries. 

The  next  year  the  principal  Hawaiian  prod- 
ucts were  admitted  free  into  the  United  States 
and  the  principal  American  products  into  Ha- 
waii. Instantly  our  trade  with  the  islands 
leaped  up.  The  American  exports  to  the  group 
rose  in  the  first  year  from  $809.257  to  $1,460,- 

40 


THE    HAWAIIAN    OBJECT    LESSON.  41 

462,  and  the  imports  from  $1,382,592  to  $2,631,- 
763.  San  Francisco's  share  increased  from 
$641,743  of  exports  to  $1,183,556,  and  from  $1,- 
126,630  of  imports  to  $2,268,003.  The  Ameri- 
can tonnage  engaged  in  the  trade  between  this 
port  and  Hawaii  grew  from  19,571  to  27,441. 

From  that  day  to  this  the  island  trade  has 
been  steadily  growing  more  important  to  the 
United  States,  and  to  San  Francisco  in  particu- 
lar. In  1890  our  exports  to  Hawaii  amounted 
to  $5,259,154.36 — more  than  six  times  as  much 
as  they  had  been  in  1876 — while  our  imports 
from  the  same  country  were  $13,021,907.34,  or 
over  nine  times  their  former  amount.  San 
Francisco's  benefits  from  this  trade  increased 
in  still  more  striking  proportion.  In  1890  this 
port  sent  to  Hawaii  $4,806,360.13  worth  of 
goods  and  received  from  it  everything  it  sold 
to  the  United  States.  One-fifth  of  the  entire 
foreign  commerce  of  San  Francisco  was  carried 
on  with  this  little  group  of  islands. 

In  1890,  224  American  vessels  of  153,098 
tons  cleared  from  Hawaiian  ports.  In  reality 
the  American  tonnage  in  that  trade  was  much 
greater  than  that,  for  some  of  the  principal 
vessels  of  the  fleet,  American  in  ownership 
and  management,  sailed  under  the  Hawaiian 
flag,  and  others  sailing  under  the  American 
flag  and  taking  passengers  and  mails  to  Hono- 
lulu were  credited  to  the  Australian  Colonies. 
But  even  on  the  face  of  the  returns  the  tonnage 
under  our  flag  in  the  Hawaiian  trade,  under 
the  effects  of  the  reciprocity  treaty,  had 
enormously  increased.  This,  while  American 


42  THE   TARIFF. 

merchant  shipping  in  general  had  been  steadily 
declining.  While  free  trade  with  Hawaii  has 
given  employment  to  about  ten  times  as  many 
American  vessels  in  1890  as  the  fettered  Ha- 
waiian commerce  did  in  1876,  the  total  foreign 
carrying  trade  in  American  ships  has  fallen  off 
two-thirds. 

In  1876  the  Hawaiian  trade  gave  employ- 
ment to  only  one-fortieth  of  the  American  ves- 
sels sailing  out  of  San  Francisco.  In  1889, 
thirteen  years  later,  it  employed  more  than 
one-seventh.  It  supported  in  1888  a  fleet  of  174 
American  vessels,  of  which  54  were  built  on  this 
Coast.  It  distributed  $4,000,000  a  year  among 
our  merchants,  sailors  and  workingmen,  and 
kept  up  such  vast  industrial  establishments  in 
San  Francisco  as  the  California  and  American 
sugar-refineries.  Ninety  per  cent  of  the  trade 
of  Hawaii  is  carried  on  with  San  Francisco. 
While  the  American  flag  has  been  so  nearly 
driven  out  of  the  general  commerce  of  the 
United  States  that  it  covers  only  about  one- 
eighth  of  our  shipments  to  and  from  all  countries, 
it  flies  over  three-fourths  of  the  total  commerce 
of  Hawaii. 

In  1890,  227  American  vessels  of  150,676 
tons  entered  at  Hawaiian  ports,  against  68 
vessels  of  79,444  tons  of  all  other  nationalities. 
Of  the  68  craft  not  on  our  register,  34  of  42,229 
tons  were  nominally  Hawaiian,  but  really 
American  in  everything  but  the  flag.  In  1889 
Hawaii  sent  99.77  per  cent  of  her  total  exports 
to  the  Pacific  ports  of  the  United  States  and 
only  .23  of  1  per  cent  to  all  the  rest  of  the 


THE    HAWAIIAN    OBJECT    LESSON.  43 

world.  In  1890  the  fraction  sent  to  the  outside 
world  was  too  small  to  figure.  In  1889  she 
bought  72.62  per  cent  of  her  total  imports 
from  our  Pacific  ports,  6.55  per  cent  from  our 
Atlantic  ports  and  20.83  per  cent  from  the  out- 
side world.  In  1890,  75.55  per  cent  of  her  im- 
ports came  from  the  United  States  and  24.65 
per  cent  from  other  countries. 

It  may  be  said  that  we  are  making  a  bad  bar- 
gain in  this  trade,  because  we  buy  more  from 
the  Hawaiians  than  they  buy  from  us.  But  the 
very  figures  that  are  supposed  to  show  this 
prove  the  immense  profit  we  gain  from  the 
trade.  Our  imports  from  Hawaii  exceed  our 
exports  to  that  country  by  $7,764,753.  As  the 
Hawaiians  have  practically  no  trade  with  any 
country  but  the  United  States,  this  balance,  if 
it  were  really  against  us,  would  have  to  be  set- 
tled in  coin.  But  in  1890  our  net  shipments  of 
coin  and  bullion  to  Hawaii  were  only  about 
$800,000.  What  became  of  the  other  $7,000,000  ? 
It  represented  the  profits  made  by  Americans  out 
of  Haivaiian  industries. 

We  have  an  ordinary  balanced  trade  of  about 
$5,000,000  a  year  with  the  islands,  and  over  and 
above  this  Hawaii  sends  us  every  year  about 
$6,000,000  or  $7,000,000  worth  of  goods  for 
which  she  receives  no  returns  at  all.  It  is 
exactly  the  position  in  which  India  is  in  regard 
to  England.  England  draws  $70,000,000  a  year 
from  India  in  the  form  of  official  salaries,  mer- 
cantile profits  and  interest  on  capital.  This  trib- 
ute has  to  be  paid  in  goods.  In  the  same  way 
the  American  planters  and  merchants  in  Hawaii 


44  THE    TARIFF. 

ship  sugar  and  rice  to  this  country,  where  it  is 
sold  and  the  money  invested  in  American  enter- 
prises. The  trade  is  one-sided,  but  the  discrep- 
ancy is  all  in  our  favor.  San  Francisco  profits 
to  the  extent  of  millions  of  dollars  a  year  by  the 
money  poured  into  circulation  here  through  the 
constant  influx  of  Hawaiian  products. 

Our  experience  with  Hawaii  proves  several 
things.  It  proves,  in  the  first  place,  that  a  50 
per  cent  tariff  like  that  under  the  McKinley  bill, 
a  47  per  cent  tariff  like  that  of  1883,  or  even  a 
42  per  cent  tariff  like  that  proposed  by  the  Mills 
bill,  is  not  necessary  to  enable  us  to  hold  our 
home  market.  We  sell  the  Hawaiians  practi- 
cally everything  they  buy.  They  get  nothing  to 
speak  of  from  the  English,  the  Germans,  the 
French  or  anybody  else.  We  ship  our  things 
1,800  miles  and  drive  our  rivals  out  of  that 
market.  Now  how  much  protection  do  we  have 
to  enable  us  to  do  that? 

Ten  per  cent. 

Our  goods  are  admitted  into  Hawaii  free  and 
those  of  other  countries  pay  10  per  cent  duty. 
That  is  all  the  advantage  we  have,  and  it  is 
ample.  This  is  where  we  have  to  pay  freight 
both  by  land  and  sea,  and  yet  we  are  told  that 
40  per  cent  of  protection  would  not  be  enough 
to  save  our  manufactures  from  being  driven  out 
of  their  own  country,  where  all  the  advantage 
of  freight  is  on  their  side. 

In  the  next  place  we  can  get  some  idea  from 
this  experiment  of  the  possibilities  of  trade  in 
other  directions.  The  Hawaiian  Kingdom  is 
smaller  than  Fresno  County,  California,  and 


THE    HAWAIIAN    OBJECT    LESSON.  45 

still  supplies  one-seventh  of  the  entire  foreign 
commerce  of  San  Francisco.  It  has  fewer 
people — white,  Kanaka  and  Chinese — than  live 
in  Alameda  County.  It  has  only  one-fortieth  of 
the  population  and  one-five-hundredth  part  the 
area  of  Australasia,  but  furnishes  a  larger  part 
of  the  commerce  of  the  United  States  than  that 
whole  enormous  group  of  colonies.  It  buys 
almost  as  much  from  us  as  the  whole  of  India, 
and  nearly  twice  as  much  as  the  whole  of  China. 
It  furnishes  more  trade  to  the  port  of  San  Fran- 
cisco than  the  whole  of  Mexico,  Central  and 
South  America.  Its  commerce  with  the  United 
States  is  greater  than  that  of  the  Kussian  Em- 
pire, and  more  than  twice  as  great  as  that  of 
the  entire  continent  of  Africa. 

Without  this  trade  it  is  probable  that  the  cen- 
sus would  have  shown  hardly  any  increase  in 
population  in  San  Francisco  during  the  past  ten 
years.  We  have  been  losing  the  traffic  of  the 
Pacific  Coast,  outside  of  northern  and  central 
California,  and  if  we  had  not  had  the  sugar  re- 
fineries with  their  1,500  men,  the  200  vessels  in 
the  Hawaiian  fleet,  with  the  men  employed  in 
building,  sailing,  repairing,  loading  and  unload- 
ing them,  and  the  merchants  and  their  employ- 
es engaged  in  handling  Hawaiian  products,  it 
is  doubtful  whether  we  should  even  have  held 
our  own.  Moreover,  without  the  profits  of  the 
stop  at  Honolulu  it  is  probable  that  the  Austra- 
lian line  would  not  have  paid  expenses,  even 
with  the  Colonial  subsidy,  and  so  we  should 
have  lost  still  another  profitable  branch  of  busi- 
ness. 


46  THE    TARIFF. 

Almost  all  of  this  commerce  was  literally  cre- 
ated by  limited  free  trade.  It  was  not  merely 
turned  in  this  direction — it  was  absolutely  called 
into  existence  by  the  reciprocity  treaty.  The 
commerce  of  Hawaii  with  countries  outside  of 
the  United  States  has  not  declined  since  the  re- 
ciprocity treaty  went  into  effect — it  has  simply 
been  dwarfed  and  overshadowed  by  the  enor- 
mous American  trade  that  reciprocity  has  cre- 
ated out  of  nothing. 

The  same  thing  can  be  repeated  with  Austra- 
lia, New  Zealand,  Samoa,  Fiji,  Java,  Japan, 
Mexico,  Central  America,  South  America  and 
British  Columbia.  There  is  trade  enough  in 
sight  in  the  Pacific  to  make  San  Francisco  a 
greater  port  than  New  York.  All  we  have  to 
do  is  to  let  it  come  here. 


CHAPTER  VIII. 

THE   BALANCE    OF    TRADE. 

Up  to  about  a  hundred  years  ago  the  rulers 
of  all  nations  acted  on  what  was  called  the 
mercantile  theory  of  commerce.  Their  idea 
was  that  the  object  of  trade  was  to  get  gold 
and  silver.  If  a  nation  sold  more  than  it 
bought  they  took  it  for  granted  that  it  was 
getting  gold  and  silver  for  the  difference,  and 
so  they  said  that  it  had  a  "  favorable  balance 
of  trade."  If  it  bought  more  than  it  sold  they 
thought  it  was  losing  its  gold  and  silver,  and  so 
they  said  that  it  had  an  "  unfavorable  balance  of 
trade."  Statesmen  plotted  and  soldiers  fought 
to  keep  the  balance  of  trade  on  their  own  side. 
Thence  came  the  notion  that  commerce  was  a 
game  in  which  one  side  or  the  other  must  lose. 
It  was  plainly  impossible  for  all  countries  to  be 
importing  gold  and  silver  at  once.  If  some  got 
more  than  their  share,  others  must  get  less. 
Hence  there  was  a  constant  struggle  on  the 
part  of  each  country  to  be  among  the  winners 
and  keep  its  neighbors  among  the  losers.  This 
was  the  prime  cause  of  high  tariffs  and  tariff 
wars.  Each  country  laid  taxes  on  goods  com- 
ing in  from  other  countries,  so  that  fewer  goods 
might  come  in  and  its  own  exports  might  be 
paid  for  in  gold  and  silver. 

This  theory  of  the  balance  of  trade,  which  is 

47 


48  THE    TARIFF. 

quoted  in  modern  books  on  political  economy  as 
a  curious  specimen  of  old  delusions,  like  the  be- 
lief in  witchcraft,  is  at  the  bottom  of  the  pres- 
ent policy  of  the  United  States,  and  is  held  by 
American  protectionists  as  a  part  of  their  politi- 
cal Bible  When  we  sell  a  great  deal  more  than 
we  buy,  they  say  that  we  are  doing  a  profitable 
business.  Their  chief  argument  against  free 
trade  is  that  if  it  were  not  for  the  tariff  foreign- 
ers would  sell  us  more  than  we  could  sell  to 
them. 

Now  to  understand  fully  what  this  argument 
is  worth  we  must  get  a  clear  view  of  this  fact, 
that  what  we  buy  is  the  pay  we  get  for  what  we 
sell. 

In  the  light  of  this  principle  what  is  a  favor- 
able balance  of  trade  ?  Is  it  not  one  in  which 
we  sell  our  goods  for  as  much  as  possible? 
Whether  we  get  gold  or  other  goods  in  ex- 
change is  a  minor  matter.  The  main  thing  is 
to  get  the  greatest  possible  value  for  what  we 
sell.  If  a  farmer  can  ship  §1,000  worth  of 
wheat  to  England  and  receive  $1 ,200  worth  of 
English  products  for  it  he  is  making  a  profitable 
bargain.  If  a  hundred  thousand  farmers  can 
do  the  same  thing  they  are  all  making  profitable 
bargains.  But  the  extra  amount  which  these 
farmers  receive  over  what  they  give — the  very 
thing  that  constitutes  their  profits — would  be 
said  by  protectionists  to  form  an  "  unfavorable 
balance  of  trade"  for  the  country.  Our  im- 
ports would  be  exceeding  our  exports,  and  so 
we  should  be  losing  money. 

Suppose  an  American  merchant  should  send 


THE    BALANCE    OF    TRADE.  49 

a  shipload  of  American  goods  to  England  and 
get  a  shipload  of  English  goods  in  return.  If 
he  made  a  shrewd  deal,  so  that  he  brought  back 
a  cargo  worth  more  than  the  one  he  sent  out, 
he  would  be  contributing  toward  an  "unfavor- 
able balance  of  trade."  But  now  suppose  the 
ship  sank  on  her  way  home  with  no  insurance 
on  the  cargo.  The  merchant  would  be  poorer, 
and  his  distress  would  be  felt  among  his  credi- 
tors, employees,  and  all  with  whom  he  had  deal- 
ings. And  yet,  on  the  protectionist  principle, 
the  nation  would  be  richer.  There  would  be  a 
favorable  instead  of  an  unfavorable  balance  of 
trade.  The  custom-house  returns  would  show  a 
shipload  of  goods  exported  with  no  imports  to 
set  against  them. 

Take  the  case  of  a  country  that  conquers  an- 
other and  exacts  a  huge  indemnity,  as  Germany 
did  with  France.  The  only  way  in  which  the 
conquered  country  can  pay  the  fine  is  by  export- 
ing goods  for  which  she  gets  no  return.  As  a 
matter  of  fact,  the  figures  show  that  up  to  the 
war  the  imports  of  France,  both  in  her  general 
trade  and  in  that  with  Germany,  exceeded  her 
exports,  while  when  the  payment  of  the  indem- 
nity began  the  balance  turned  the  other  way 
and  France  sent  out  more  than  she  took 
in.  Protectionists  would  say  that  before  the 
war  France  was  losing  money,  and  that  after  it 
she  was  prosperous  On  the  same  principle 
Germany,  while  the  savings  of  the  French  peas- 
ants were  being  poured  into  her  treasury,  was 
being  steadily  ruined  by  her  excess  of  imports. 
The  balance  of  trade  between  England  and  this 


50  THE    TARIFF. 

country  is  made  up  partly  on  this  principle.  Of 
course  England  has  not  conquered  us,  but  Eng- 
lishmen own  a  large  part  of  the  United  States. 
The  Scully  estates  in  Illinois,  the  Schenley  es- 
tates in  Pittsburg,  the  Dunraven  estates  in  the 
far  West,  and  dozens  of  other  valuable  tracts  of 
American  land  are  worked  for  the  benefit  of  the 
British  landlords.  The  produce  of  the  land  is 
sent  to  England  and  sold,  the  money  is  kept  in 
London  as  rent ;  nothing  is  returned  to  Amer- 
ica in  its  place,  and  we  have  a  "  favorable  bal- 
ance of  trade"  because  we  send  more  to  Eng- 
land than  she  sends  to  us. 

Of  course  there  are  times  when  an  "  unfavor- 
able balance  of  trade  "  is  dangerous.  When  the 
excess  of  goods  imported  represents,  not  profits, 
but  debt,  there  is  trouble  ahead.  When  we 
were  borrowing  money  from  Europe  to  carry  on 
our  war  we  were  getting  ready  for  a  pinch  when 
the  time  came  to  pay  it  back.  When  the  peo- 
ple of  the  Argentine  Eepublic,  in  the  height  of 
the  late  boom,  imported  all  sorts  of  useless  lux- 
uries on  credit,  discounting  the  future  growth 
of  the  country,  they  were  laying  the  train  for  a 
financial  explosion.  But  even  in  these  cases 
there  was  prosperity  so  long  as  the  "unfavorable 
balance"  could  be  kept.  There  were  no  com- 
plaints while  the  United  States  and  the  Argen- 
tine Republic  were  being  "flooded  with  foreign 
goods."  Everybody  was  making  money  then, 
and  it  was  only  when  the  time  for  settlement 
came  and  the  balance  had  to  turn  the  other  way 
that  the  hard  times  began. 

On  the  other   hand    England   always   has  a 


THE   BALANCE    OF   TRADE.  51 

heavy  balance  of  trade  "against ''  her,  and  she 
is  being  steadily  enriched  by  it.  In  1890  her 
imports  were  greater  than  her  exports  by  $462,- 
000,000.  This  means  that  the  whole  world  is 
paying  her  tribute,  and  not  being  able  to  pay  it 
in  money,  is  paying  in  goods.  About  $100,000,- 
000  of  this  stands  for  freights  collected  by  British 
shipowners.  Another  $70,000,000  comes  from 
India,  in  the  form  of  salaries  of  British  officials 
and  interest  on  bonds.  The  rest  represents  the 
profits  on  British  investments  in  foreign  rail- 
roads, telegraphs,  ranches,  mines,  government 
loans  and  other  enterprises  all  over  the  world. 
According  to  the  balance-of -trade  theory,  Great 
Britain  should  have  sent  out  $462,000,000  in 
cash  in  1890  to  pay  for  her  excess  of  imports. 
But  the  actual  fact  was  that  in  addition  to  send- 
ing her  $462,000,000  worth  of  goods  more  than 
she  sent  them,  foreign  nations  paid  her  a  bal- 
ance of  $43,900,000  in  gold  and  silver. 

On  the  other  hand  let  us  take  a  look  at 
Hawaii.  There  is  a  country  that  ought  to  be 
piling  up  gold  and  silver  if  there  be  any  truth 
in  the  balance-of-trade  theory.  Last  year  Ha- 
waii sold  goods  to  the  value  of  $13,023,304,  and 
bought  only  $6,962,201  worth.  That  leaves  a 
balance  of  $6,061,103  that  should  have  been 
sent  to  the  islands  in  coin.  But  it  happens  that 
the  net  imports  of  gold  and  silver  into  Hawaii 
for  the  year  amounted  to  only  $815,554.30. 
What  became  of  the  extra  $5,245,548.70?  It 
mostly  stayed  in  San  Francisco.  The  owners  of 
a  large  part  of  the  Hawaiian  sugar  lived  in  this 
city,  and  when  they  sold  their  crops  they  spent 


52  THE    TARIFF. 

the  money  here  instead  of  sending  it  to  the 
islands.  The  balance  of  trade  that  seemed  so 
favorable  to  Hawaii  was  really  all  in  favor  of 
the  United  States. 

The  truth  is  that  it  is  to  the  interest  of  every 
nation  to  get  just  as  much  as  it  can  for  what  it 
has  to  sell,  just  as  much  as  it  is  the  interest  of 
every  private  merchant  to  do  the  same.  If  we 
can  get  a  ton  of  English  coal  for  three  bushels 
of  American  wheat  we  are  making  a  better 
trade  than  we  should  be  if  the  same  amount  of 
coal  cost  us  four  bushels  of  wheat.  As  long  as 
our  imports  consist  of  useful  things  that  come 
to  us  without  making  us  mortgage  the  future 
we  have  no  reason  to  be  afraid  of  getting  too 
much  of  them.  The  more  the  better.  Of  course 
if  we  buy  luxuries  we  are  unable  to  pay  for  we 
shall  suffer  for  it  when  the  time  to  settle  comes 
round. 


CHAPTER  IX. 

THE   TARIFF    AND    SHIPPING. 

It  is  pretty  generally  known  that  our  shipping 
industry  is  in  a  bad  way.  Instead  of  keeping 
pace  with  the  progress  of  the  country  in  other 
directions,  it  has  been  declining  for  more  than 
thirty  years.  The  following  table  shows  in  a 
graphic  form  the  extent  of  the  decline.  It  exhib- 
its the  percentage  of  our  foreign  trade  carried 
on  in  American  vessels  at  different  times: 

1855    1861   1865    1870    1875    1880    1885  1890 


65.2 


27.7 


35.6 


17.6 


17.2 


12.3 


53 


54  THE    TARIFF. 

Plainly  our  merchant  marine  is  rapidly  ap- 
proaching a  vanishing  point.  And  yet  a  gen- 
eration ago  America  seemed  certain  to  be  the 
greatest  sea  power  in  the  world.  It  was  gain- 
ing on  England  as  rapidly  in  ships  as  in  rail- 
roads.. It  possessed  practically  as  much  ton- 
nage as  Great  Britain  and  more  than  all  the 
rest  of  the  world  put  together.  When  the  Brit- 
ish navigation  laws  were  repealed  and  ships  of 
all  nations  were  allowed  to  share  the  English 
trade  it  was  predicted  in  Parliament  that  the 
Stars  and  Stripes  would  soon  drive  the  Union 
Jack  from  the  ocean.  In  1837  our  tonnage  in 
the  foreign  trade  was  only  810,000.  Twenty 
years  later  it  had  increased  to  2,463,000,  and  in 
1861  it  had  reached  2,642,000— more  than  two 
and  a  half  times  its  amount  to-day.  In  1861 
the  United  States  owned  5,539,813  tons  of  ship- 
ping of  all  kinds,  the  entire  British  Empire  5,895,- 
369  and  all  the  rest  of  the  world  5,800,767.  The 
American  tonnage  exceeded  that  of  the  United 
Kingdom,  not  counting  the  British  colonies. 
In  1890  we  had  only  928,062  tons  in  the  foreign 
trade  and  4,424,497.44  tons  in  all.  Not  only 
had  our  ships  trading  over  seas  almost  entirely 
disappeared,  but  even  our  tonnage  in  the  coast- 
ing trade,  carefully  protected  as  it  was  from  all 
foreign  competition,  remained  almost  station- 
ary. At  the  same  time  Great  Britain,  which 
had  thrown  even  her  coasting  trade  open  to  the 
free  competition  of  the  world,  had  leaped  ahead 
at  a  rate  never  witnessed  before.  Her  net  ton- 
nage, which  was  4,658,687  in  1860,  had  jumped 
to  7,759,008  in  1889,  and  her  builders  turned 


THE    TARIFF    AND    SHIPPING.  55 

out  more  tons  of  new  shipping  in  a  single  year 
than  we  have  on  our  whole  registry.  In  1890 
the  gross  tonnage  of  British  vessels  of  over  100 
tons  each  was  10,585,747  for  Great  Britain,  and 
1,342,877  for  the  Colonies,  or  11,928,624  for  the 
whole  empire,  against  3,515,552.80  for  the 
United  States.  In  steamers  the  difference  was 
even  more  remarkable.  There  were  6,595  Brit- 
ish steam  vessels,  of  8,653,543  gross  tons, 
against  2,766  American  vessels  of  1,722,481.25 
tons. 

Now  what  was  the  cause  of  all  this  ?  It  was 
very  simple.  Up  to  the  year  1855  or  there- 
abouts the  commerce  of  the  world  was  carried 
on  in  wooden  ships,  and  the  cheapest  and  best 
wooden  ships  in  existence  were  built  in  the 
United  States,  as  they  still  are.  To  this  day 
our  builders  can  turn  out  wooden  vessels  30  per 
cent  cheaper  than  those  of  England  can.  But 
about  1855  iron  began  to  force  its  way  into  use 
as  a  shipbuilding  material,  and  in  this  direction 
the  English  had  as  great  an  advantage  over  us 
as  we  had  over  them  in  wood.  They  had  great 
deposits  of  coal  and  iron  close  by  each  other 
and  close  to  tide-water,  with  ample  supplies  of 
skilled  labor  to  work  them.  The  result  was 
that  they  could  build  iron  ships  30  per  cent 
cheaper  than  we  could*  Now,  an  iron  vessel  is 
lighter  than  a  wooden  one  of  the  same  size ;  it 
can  carry  more  freight,  it  lasts  longer  and  com- 
mands better  rates  of  insurance.  Consequently, 
it  has  an  advantage  that  cannot  be  overcome  in 
competing  for  business.  After  the  repeal  of 
the  British  navigation  acts  in  1849  Englishmen 


56  THE    TARIFF. 

were  allowed  to  buy  the  cheap  American 
wooden  ships,  and  so  kept  themselves  from  be- 
ing driven  from  the  sea.  but  when  the  condi- 
tions changed  and  the  English  ships  became 
cheaper  we  were  forbidden  to  profit  by  their  ex- 
ample. Our  merchants  were  compelled  to  use 
American  ships  or  none  at  all,  and  as  they 
could  not  compete  with  their  foreign  rivals 
with  American  ships  they  used  none. 

If  Congress,  immediately  after  the  change  in 
the  methods  of  shipbuilding,  had  admitted  all 
the  materials  for  the  construction  of  iron  ships 
free  of  duty  something  might  have  been  done  to 
check  the  decay  of  our  merchant  marine.  But 
it  not  only  did  not  do  this,  but  piled  new  bur- 
dens upon  the  struggling  industry.  Between 
1855  and  1861  our  shipping  was  just  trembling 
in  the  balance.  Sharp  eyes  could  see  that  it 
was  about  to  go  down,  but  to  the  casual  observer 
it  seemed  as  flourishing  as  ever.  Our  flag  still 
flew  on  every  sea.  But  in  1861  and  after  came 
a  series  of  stunning  blows.  The  Morrill  Tariff 
cut  down  cargoes  and  increased  the  cost  of  ma- 
terials for  building  and  repair.  The  Confeder- 
ate cruisers  swept  our  flag  from  the  ocean,  and 
under  the  thoughtful  provisions  of  our  naviga- 
tion laws  an  American  vessel  once  transferred 
to  a  foreign  flag  could  never  again  be  registered 
in  the  American  merchant  marine.  If  our  ship- 
building industry  had  been  in  a  healthy  condi- 
tion these  losses  would  soon  have  been  made 
up,  but  as  it  was,  the  vessels  burned  or  sold 
were  not  replaced.  After  the  war  our  shipping 
kept  on  going  steadily  down  hill,  and  it  has 


THE   TARIFF    AND    SHIPPING.  57 

never  yet  shown  signs  of  recovery.  The  lowest 
point  it  ever  reached  is  indicated  in  the  reports 
for  1890. 

The  palmy  days  of  the  American  shipping 
industry  were  during  the  low  tariff  period  from 
1846  to  1861.  At  that  time  we  not  only  did 
three-quarters  of  our  own  foreign  carrying  trade, 
but  we  did  a  large  part  of  the  carrying  for 
other  nations.  We  had  a  greater  tonnage  of 
vessels  sailing  from  one  foreign  port  to  another 
and  never  visiting  an  American  port  except  for 
repairs  than  we  have  now  in  our  entire  foreign 
trade.  We  collected  enough  in  freight  charges 
from  foreigners  to  make  up  for  a  consider- 
able excess  of  imports.  At  present  the  balance 
is  on  the  other  side.  We  pay  to  British  ship- 
owners more  than  enough  to  wipe  out  the  al- 
leged benefits  of  our  "  favorable  balance  of 
trade" — or  rather  this  so-called  favorable  bal- 
ance is  caused  largely  by  the  necessity  of  selling 
more  goods  than  we  buy  in  order  to  pay  these 
British  freight  charges. 

The  only  cure  protectionists  have  to  offer  for 
the  wretched  condition  of  our  shipping  industry 
is  subsidies.  In  other  words,  after  having  made 
the  business  unprofitable  by  law  they  propose  to 
hire  people  to  carry  it  on  in  spite  of  the  laws. 
There  is  no  doubt  that  we  can  acquire  a  mer- 
chant marine  in  this  way,  although  no  nation 
has  ever  done  it,  if  we  are  willing  to  pay  enough 
for  it.  But  the  best  and  cheapest  way  to  go 
about  it,  if  we  are  determined  to  tax  the  people 
in  one  direction  to  overcome  the  effects  of  taxes 
in  another,  would  be  to  have  the  Government 


58  THE    TARIFF. 

build  the  ships  and  own  them  itself.  Then  it 
would  be  sure  of  getting  its  money's  worth.  To 
support  a  merchant  marine  like  that  of  Great 
Britain,  on  the  plan  proposed  by  the  Tonnage 
Bounty  Bill  defeated  in  the  last  Congress,  would 
cost  the  Treasury  at  least  $140,000,000  a  year. 
We  could  match  every  vessel  that  England  owns 
for  $1,000,000,000.  The  interest  on  that  would 
be  $30,000,000  a  year,  and  $40,000,000  more 
would  provide  a  fund  to  replace  the  ships  when 
they  wore  out  or  ran  aground.  The  Govern- 
ment could  own  its  own  merchant  marine,  there- 
fore, for  half  what  it  would  cost  on  the  bounty 
plan  to  encourage  private  speculators  to  invest 
in  one. 

But  the  question  is,  whether  it  is  a  good  policy 
to  spend  the  taxpayers'  money  in  that  way.  If 
we  are  going  to  adopt  socialistic  principles 
throughout  there  is  nothing  more  to  be  said.  If 
the  Government  is  to  own  all  the  factories  and 
butcher-shops,  and  farms  and  grocery  stores, 
there  is  no  reason  why  it  should  not  own  the 
ships.  Certainly  it  would  be  better  for  it  to 
own  these  things  than  to  hire  people  to  carry  on 
business  at  a  loss.  But  so  long  as  we  stick  to 
the  old  way  of  having  people  earn  their  own 
living  on  their  own  hook  the  best  thing  the  Gov- 
ernment can  do  for  the  shipping  industry  is  to 
keep  its  hands  off. 

In  the  days  when  our  shipping  thrived  and 
grew  we  paid  no  subsidies.  Our  merchants  and 
seamen  took  care  of  themselves.  Our  ships 
were  better,  faster  and  cheaper  than  those  of 
other  nations ;  they  had  better  crews  and  were 


THE    TARIFF    AND    SHIPPING.  59 

more  smartly  sailed;  they  commanded  better 
rates  of  freight  and  insurance,  and  they  took 
the  cream  of  the  business.  .At  the  present  day 
England  pays  no  subsidies,  except  in  very  ex- 
ceptional cases,  like  the  line  from  Vancouver  to 
China,  which  is  considered  a  link  in  the  chain 
that  binds  the  empire  together.  She  spends 
something  less  than  $3,500,000  a  year  on  her 
entire  foreign  mail  service,  and  $210,000  a  year 
to  retain  certain  specially  constructed  steamers 
in  the  naval  reserve.  This  is  all  the  British 
Government  pays  toward  the  support  of  a  mer- 
chant marine  that  now  includes  half  the  shipping 
of  the  globe,  and  she  pays  that,  not  for  the  bene- 
fit of  the  ships,  but  for  certain  definite  public 
services. 

We  can  get  all  the  ships  we  need  just  as  soon 
as  we  are  ready  to  go  about  it  in  the  right  way. 
As  soon  as  we  stop  tying  up  our  merchants  with 
all  sorts  of  absurd  rules  and  weighing  them 
down  with  all  sorts  of  unnecessary  fines  the 
ships  will  come  of  themselves.  But  as  long  as 
we  not  only  forbid  American  citizens  to  buy 
ships  where  they  can  get  them  on  the  best 
terms,  but  even  compel  an  American-built  ves- 
sel to  haul  down  her  flag  if  the  owner  of  a 
single  fraction  of  her  goes  to  live  abroad  for 
his  health  we  must  expect  to  pay  pretty  high 
before  we  can  get  the  ocean  covered  with 
American  keels  hired  at  public  expense. 


CHAPTER  X. 

THE  TARIFF  AND  THE  FOREIGNER. 

Mr.  McKinley  claims  more  for  his  great  bill 
than  the  mere  protection  of  American  labor. 
He  says  that  it  is  making  foreigners  pay  our 
taxes,  so  that  as  far  as  the  duties  go  we  are 
running  our  Government  at  the  expense  of  other 
countries.  This  is  important,  if  true.  The  only 
drawback  is  that  there  is  no  patent  on  the  in- 
vention. Almost  every  nation  in  the  world 
raises  money  by  a  tariff,  so  that  on  the  McKin- 
ley theory  every  nation  is  helping  to  support  its 
neighbor's  governments  instead  of  its  own.  If 
this  be  true  the  people  of  Europe  are  all  on  the 
wrong  tack.  Instead  of  complaining  of  the  ex- 
travagance of  their  rulers  they  should  be 
anxious  to  have  their  own  governments  spend 
as  much  money  and  foreign  governments  as 
little  as  possible.  But  these  people  have  the 
idea  that  they  pay  their  own  taxes.  The  Ital- 
ians are  not  worrying  about  the  amount  of 
money  spent  by  the  French,  although  on  Mr. 
McKinley's  principle  they  are  paying  their  share 
of  it ;  but  they  grumble  all  the  time  at  the 
money  spent  by  their  own  rulers,  although  it 
comes  largely  from  duties,  which  Mr.  McKinley 
says  the  foreigners  pay.  Which  is  right  ? 

Tariff  taxes  are  divided  into  two  parts — that 
paid  to  the  Government  and  that  paid  to  pro- 


THE  TARIFF  AND  THE  FOREIGNER.      61 

tected  private  capitalists.  Nobody  pretends 
that  foreigners  pay  the  second  part,  which  in 
this  country  is  about  three  times  as  great  as  the 
other.  When  an  American  woolen  manufacturer 
charges  an  American  buyer  a  dollar  for  a  yard 
of  cloth  which  could  be  bought  in  England  for 
fifty  cents  there  is  no  foreigner  in  the  case  at 
all.  An  American  collects  the  tax  and  an 
American  pays  it.  It  is  estimated  that  Ameri- 
can railroads — that  is  to  say,  American  ship- 
pers and  passengers — paid,  within  twelve  years, 
about  $180,000,000  more  for  steel  rails  than  they 
were  worth.  The  prices  of  rails  have  gone 
down  in  this  country,  but  at  almost  any  given 
time  they  have  been  higher  than  the  prices  in 
England  by  nearly  the  amount  of  the  duties. 
If  the  new  tin-plate  combination  can  succeed  in 
supplying  the  American  market  it  will  collect 
about  $15,000,000  a  year  from  the  American 
people  in  taxes  above  the  market  value  of  its 
goods. 

If  any  of  our  taxes  are  paid  by  foreigners, 
therefore,  they  must  be  those  levied  on  things 
we  import.  Have  we  anything  that  throws 
light  on  this  point  ?  We  have,  and  fortunately 
one  of  the  best  tests  that  could  be  asked  has 
been  furnished  by  Mr.  McKinley.  In  1890  we 
bought  $87,602,907.72  worth  of  foreign  sugar, 
and  somebody  paid  the  Government  $55,166,- 
703.40  in  duties.  If  that  somebody  were  the 
foreigner  it  could  make  no  difference  to  Ameri- 
can buyers  whether  the  tax  were  taken  off  or 
left  on.  But  as  soon  as  the  duty  was  removed 
the  price  in  all  the  Eastern  markets  fell  by  the 


62  THE    TARIFF. 

full  amount  that  had  formerly  been  collected. 
Clearly,  the  duties  had  come  out  of  American 
pockets. 

There  are  plenty  of  other  cases  in  which  it  is 
plain  on  its  face  that  the  foreigner  does  not  and 
cannot  pay  the  tax.  For  instance,  the  lowest 
tax  imposed  by  the  McKinley  bill  on  imported 
horses  is  $30  apiece.  Now,  on  the  Mexican 
frontier  there  is  an  abundance  of  mustangs 
that  can  be  bought  at  $15  or  $20  each.  It  will 
hardly  be  said  that  when  a  Mexican  sells  a  horse 
for  $15  to  be  taken  across  the  line  into  Texas  he 
pays  $30  to  our  Government  for  the  pleasure  of 
making  the  trade.  The  $30  is  paid  by  the  Texan 
buyer,  and  when  he  gets  his  horse  home  he  has 
a  $45  animal. 

Anybody  that  has  ever  lived  near  a  frontier 
knows  how  such  things  go  without  being  told. 
The  merchants  of  San  Diego  know  who  pays 
the  Mexican  duties  on  the  flour  they  sell  in 
Lower  California.  If  they  had  to  deduct  those 
duties  from  the  price  of  the  flour  the  Sheriff 
would  be  running  their  business  inside  of  a 
week.  Merchants  in  general,  if  they  have  any 
dealings  with  foreign  countries,  understand  the 
subject  equally  well.  Whenever  one  of  them 
buys  a  bill  of  goods  abroad  he  pays  the  market 
price  in  the  place  of  sale,  and  then  pays  the  duty 
besides.  If  this  were  not  so  there  could  be  no 
such  thing  as  a  market  price  anywhere.  There 
would  be  as  many  different  prices  as  there  were 
tariffs  in  the  world. 

If  you  pick  up  an  English  paper  devoted  to 
the  iron  trade  you  will  find  steel  rails  of  a  cer- 


THE  TARIFF  AND  THE  FOREIGNER.      63 

tain  grade  quoted  at  a  certain  figure.  You  can 
go  to  Lancashire  and  buy  them  at  that  rate, 
and  when  you  have  bought  them  they  are  yours 
and  you  can  do  what  you  please  with  them. 
You  can  send  them  to  the  United  States  and  pay 
a  duty  of  $13.44  per  ton,  or  to  Hawaii  and  pay 
10  per  cent,  or  to  Chile  and  pay  15  per  cent,  or 
to  Mexico  and  pay  nothing  at  all.  If  you  saw 
rails  quoted  at  £4  per  ton  and  told  the  manu- 
facturer that  you  wanted  to  buy  5,000  tons  for 
the  United  States,  for  which  you  would  pay  £1 
6s;  1,000  tons  for  Hawaii,  for  which  you  would 
give  £3  7s  6d ;  2,000  tons  for  Chile,  for  which 
you  would  give  £3  5s,  and  2,000  tons  for  Mexico, 
for  which  you  would  give  £4,  he  would  edge  off 
behind  a  clerk  until  a  policeman  could  search 
you  for  a  possible  dynamite  bomb.  Yet  you 
would  be  doing  precisely  what  protectionists 
say  is  always  done  in  such  cases.  You  would 
be  deducting  the  duties  in  each  country  from 
the  foreign  price. 

That  is  not  the  way  business  is  carried  on. 
When  we  cannot  pay  the  full  market  price  for 
English  steel  rails,  add  freight,  duty  and  profits, 
and  still  sell  them  as  cheap  as  the  American 
article,  we  do  not  buy  them.  There  are  many 
years  in  which  scarcely  a  ton  of  foreign  rails  is 
sold  in  the  United  States. 

The  way  the  tariff  works  in  this  respect  is  to 
pinch  the  American  buyer  when  he  most  feels 
the  squeeze.  We  put  a  heavy  duty  on  rails. 
In  ordinary  years,  when  railroad  building  is 
slack,  there  is  not  enough  trade  to  keep  our  own 
mills  busy,  and  no  rails  are  imported.  Then 


64  THE    TARIFF. 

comes  a  sudden  excitement.  Railroads  race 
with  each  other  to  extend  their  lines.  The 
American  mills  cannot  fill  their  orders,  prices 
go  up,  rails  must  be  had  at  any  figure ;  we  send 
abroad  for  them,  and  our  shippers  have  to  pay 
the  taxes. 

We  put  a  duty  of  twenty-five  cents  a  bushel 
on  potatoes.  It  is  to  "protect  the  farmer."  The 
farmer  has  a  good  crop ;  he  raises  more  potatoes 
than  he  can  sell,  and  the  price  goes  down  in 
spite  of  the  duty.  Then  comes  a  bad  year ; 
the  crop  is  a  failure,  and  the  people  along  the 
border  have  to  import  from  Canada  or  go  with- 
out. Now  would  be  the  time  for  the  American 
farmer  to  profit  by  the  tax,  but  he  has  no  pota- 
toes to  sell.  The  consumer  has  to  pay  double 
prices,  and  nobody  gets  any  benefit  from  them. 

The  wheat  growers  of  California  have  a  good 
chance  to  see  who  pays  the  duties  by  looking 
at  their  grain  bags.  Almost  all  that  are  used 
are  imported.  The  price  in  San  Francisco  is  the 
price  in  Calcutta  with  freight,  duties  and  other 
expenses  added.  Any  farmer  can  buy  his  bags 
two  cents  a  pound  cheaper  by  agreeing  to  pay 
the  duties  himself,  but  he  will  find  that  what- 
ever form  of  figuring  he  may  adopt  the  tax 
comes  out  of  his  pocket  in  the  end.  The  fact 
was  openly  avowed  by  the  late  Republican  Leg- 
islature, which  asked  Congress  to  remove  these 
duties  on  the  ground  that  the  farmers  had  to 
pay  them  while  nobody  gained  any  benefit  from 
them. 

If  the  McKinley  idea  were  correct,  it  is  safe 
to  say  that  there  would  not  be  a  tax  in  the  world 


THE  TARIFF  AND  THE  FOREIGNER.      65 

except  tariff  taxes.  Every  nation  would  be  so 
eager  to  make  its  neighbors  pay  its  expenses 
that  it  would  pile  on  duties  until  it  had  money 
enough  not  only  to  keep  its  government  running, 
but  to  divide  among  its  people.  The  nations 
with  the  highest  tariffs  would  be  the  most  pros- 
perous, for  they  would  be  drawing  in  the  most 
money  from  abroad.  Guatemala,  Russia  and 
Italy  would  be  getting  rich  faster  than  England, 
Holland  and  New  South  Wales.  Until  we  see 
a  state  of  things  something  like  this  we  may  as 
well  stick  to  the  old  doctrine  that  the  only  way 
one  nation  can  make  another  foot  its  bills  is  to 
collect  its  taxes  with  an  army. 


CHAPTER  XI. 

LOCAL  AND  TARIFF  TAXES. 

One  of  the  worst  points  in  the  plan  of  collect- 
ing taxes  by  means  of  a  tariff  is  the  fact  that 
people  under  such  a  system  do  not  realize  how 
much  they  pay  and  so  do  not  check  extrava- 
gance in  their  servants.  If  the  taxpayers  could 
measure  exactly  what  the  National  Government 
costs  them,  as  they  can  with  State  and  local 
governments,  the  late  Congress  would  never 
have  been  allowed  to  spend  a  billion  dollars. 
The  people  were  quick  enough  to  make  them- 
selves heard  when  the  California  Legislature  in 
1889  appropriated  $12,000,000  for  two  years'  ex- 
penses, because  that  money  could  be  traced.  But 
the  average  citizen  does  not  realize  that  every 
time  he  buys  a  hat,  or  a  suit  of  clothes,  or  a 
cigar,  or  a  codfish,  he  is  paying  taxes  to  the 
General  Government,  or  to  somebody  to  whom 
that  Government  gives  the  privilege  of  taxing 
the  community  for  his  private  profit. 

Let  us  compare  the  amounts  which  the 
masses  pay  on  account  of  tariff  and  local 
taxes.  Let  us  take  a  workingman,  with  an 
average  family,  living  in  a  rented  house  as- 
sessed at  $1,500.  That  there  may  be  no  dis- 
pute, we  will  assume  that  the  landlord  adds  all 
the  taxes  to  the  rent,  which  as  a  general  thing 
he  does  not  and  cannot  do.  The  personal  prop- 


LOCAL  AND  TARIFF  TAXES.          67 

erty  of  the  family  may   be   assessed  at  $200. 
We  have,  then : 

Real  estate $1,500 

Personal  property 200 

Total $1,700 

On  which  the  State  and  local  taxes,  at,  say, 
$1.50  per  $100,  would  amount  to  $25.50  a  year, 
or  not  quite  50  cents  a  week.  That  is  a  good 
deal  of  money,  and  worth  cutting  down  as  much 
as  possible.  But  how  does  it  compare  with 
what  the  same  family  pays  on  account  of  the 
tariff?  To  say  that  a  father,  mother  and  five 
children  spend  $150  a  year  for  clothes  is  cer- 
tainly a  low  estimate.  Some  articles  can  be 
bought  as  cheaply,  or  almost  as  cheaply,  in  this 
country  as  abroad.  Others  cost  our  people 
twice,  and  even  three  times  as  much  as  for- 
eigners pay  for  things  of  the  same  kind.  Tak- 
ing everything  together,  it  is  safe  to  say  that 
but  for  the  tariff  the  clothes  for  which  our  fam- 
ily now  pays  $150  would  not  cost  over  $100. 
We  have,  then,  a  tax  of  $50  on  that  single 
item. 

For  crockery,  glassware,  cutlery  and  furni- 
ture it  would  be  a  very  careful  or  a  very  poor 
workingman's  family  that  did  not  spend  at 
least  $25  in  a  year.  Of  this  about  $15  would 
go  for  the  goods  and  $10  for  the  tariff  taxes. 

Since  the  removal  of  the  duties  on  raw  sugar 
the  American  consumer  has  been  let  off  more 
easily  in  the  matter  of  food  than  in  anything 
else.  His  tea  and  coffee  are  free,  and  his  sugar 


68  THE   TARIFF. 

nearly  so,  and  of  course  his  bread  and  meat  are 
not  affected  by  the  tariff,  nor  his  butter,  eggs, 
cheese,  milk  and  vegetables,  except  in  certain 
localities.  On  rice  he  has  to  pay  a  tax  of  2  cents 
a  pound,  on  sardines  5  cents  per  half  box,  on 
salted  and  smoked  fish  from  half  a  cent  to  a  cent 
a  pound,  on  macaroni  and  vermicelli  2  cents  a 
pound,  on  chocolate  and  cocoa  the  same,  on  salt 
12  cents  per  hundred  pounds,  on  mustard  10 
cents  a  pound  and  on  spices  4  cents  a  pound. 
Taking  all  the  small  imported  items  together  the 
family  may  get  off  with  a  tax  of  $5  a  year. 

The  use  of  tobacco  is  a  bad  habit,  but  still  it 
is  one  that  is  quite  commonly  indulged  in.  It 
costs  the  victims  from  40  cents  to  $5  a  pound  in 
bare  tariff  taxes  in  addition  to  the  internal  reve- 
nue taxes  and  the  profits  of  dealers  on  their 
advance  of  the  duties.  Whether  the  tobacco  be 
imported  or  domestic  the  taxes  are  paid  just  the 
same,  the  only  difference  being  that  in  the  for- 
mer case  they  are  paid  to  the  Government  and  in 
the  latter  they  are  collected  by  private  producers. 
If  our  workingman  be  anything  of  a  tobacco  user 
at  all,  his  contributions  to  the  tariff  under  that 
head  can  hardly  be  less  than  5  cents  a  day,  or 
say  $18  a  year.  If  he  have  a  son  old  enough  to 
help  him  smoke,  the  family  expenses  for  this 
item  will  be  at  least  doubled. 

If  this  family  lived  in  the  East  it  would  have 
to  keep  two  or  three  coal  fires  burning  all  winter 
for  warmth.  But  as  it  lives  in  San  Francisco, 
we  will  assume  that  it  has  no  fire  except  the  one 
in  the  kitchen  stove,  which  is  used  for  heating 
the  water  for  washing  as  well  as  for  cooking. 


LOCAL   AND    TARIFF   TAXES.  69 

It  will  take  at  least  eight  tons  of  coal  a  year  to 
keep  this  stove  going.  Directly  and  indirectly, 
taking  into  account  the  effect  of  the  tariff  in 
keeping  away  cargoes  and  causing  coal  famines, 
the  tax  on  coal  keeps  the  San  Francisco  price  on 
an  average  fully  $5  per  ton  higher  than  it  ought 
to  be.  But  we  will  say  nothing  about  that.  We 
will  simply  take  the  direct  cost  of  the  tax  and 
the  necessary  commissions,  amounting  to  about 
$1  per  ton.  That  makes  $8  a  year  added  to  one 
family's  coal  bill. 

Here  we  have  tariff  taxes  for  one  poor  family 
footing  up  $91  a  year.  There  are  all  sorts  of 
odds  and  ends,  such  as  paper,  brushes,  toys, 
matches,  medicines,  pictures,  paint,  nails,  soap, 
candles,  pins,  tinware  and  the  like,  which  would 
certainly  bring  the  figures  up  to  an  even  $100. 
State  and  local  taxes  take  $25.50 — tariff  taxes 
take  $100.  For  the  $25.50  the  workman  has  a 
school  for  the  education  of  his  children,  streets 
— such  as  they  are — to  walk  over  to  his  work, 
sewers — of  a  kind — to  prevent  disease,  a  park 
for  his  family  to  breathe  in,  a  library  of  60,000 
volumes,  courts  and  policemen  to  protect  him 
against  robbery  or  violence,  hospitals  to  care  for 
him  if  he  should  be  sick,  and  asylums  to  receive 
him  if  he  should  be  stricken  with  affliction.  For 
the  $100  he  has  Congress,  a  supply  of  great 
buildings  at  Washington  which  he  can  never 
see,  a  skeleton  army,  a  sample  of  a  navy,  a  mil- 
lion pensioners,  a  number  of  Indian  agents, 
some  very  good  geological,  topographical  and 
hydrographic  maps,  and  several  Andrew  Carne- 
gies  worth  $20,000,000  apiece.  The  Post  Office 


70  THE    TARIFF. 

does  not  count,  because  it  supports  itself  for  the 
most  part  out  of  its  sales  of  stamps.  The  San 
Francisco  workman  pays  his  $100  without  a 
murmur,  or  if  he  grumbles  at  anybody  it  is  at 
the  storekeeper.  But  when  the  State  and  city 
call  on  him  for  $25. 50  he  is  hit  hard.  He  talks 
about  the  extravagance  of  local  politicians  and 
the  burdens  of  taxation,  and  he  is  willing  to 
support  any  party  that  will  agree  to  take  $2  off 
of  the  annual  bill. 

And  yet  when  its  nature  is  understood,  the 
tariff  tax  is  more  galling,  dollar  for  dollar,  than 
the  direct  tax.  It  comes  out  of  a  man's  private 
earnings  and  is  measured  by  his  private  expen- 
ses. The  local  tax,  which  is  based  principally 
upon  land,  is  the  price  of  a  special  privilege  en- 
joyed by  the  one  who  pays  for  it.  That  land 
gains  its  value  from  the  presence  of  the  com- 
munity, and  it  is  only  fair  that  the  community 
should  get  some  benefit  from  it.  The  tax  is  not 
really  a  tax  at  all,  but  rent.  Moreover,  what- 
ever is  spent  in  this  way  is  spent  for  the  public 
benefit,  unless  it  is  stolen.  But  three  dollars 
collected  in  tariff  taxes  go  into  private  pockets 
for  every  dollar  that  goes  into  the  public  treas- 
ury. Some  things  protected  by  duties  are  not 
imported  at  all,  but  the  prices  of  the  American 
articles  are  just  as  high  as  those  of  foreign  ar- 
ticles would  be  with  the  duty  added.  In  these 
cases  the  Government  does  not  get  a  cent — the 
whole  tax  is  a  dead  loss  to  the  people  who  pay 
the  money. 

Consider  what  it  means  to  a  working  family 
to  have  $100  or  even  §50  taken  out  of  its  yearly 


LOCAL    AND    TARIFF    TAXES.  71 

income  without  any  return  and  you  may  have 
some  measure  of  the  hardships  of  tariff  taxa- 
tion. If  this  amount  of  money  were  taken 
directly  by  the  tax-gatherer  no  government 
could  live  through  the  storm  that  would  follow. 
But  until  the  tariff  question  began  to  be  dis- 
cussed a  few  years  ago  few  people  realized  that 
they  were  being  taxed  by  customs  duties  at  all. 
They  thought  it  was  natural  to  pay  high  prices 
for  goods  in  America,  and  it  never  occurred  to 
them  that  every  working  family  was  deprived 
of  from  $50  to  $100  a  year  through  the  fault  of 
the  Government.  Still  less  did  they  realize  that 
three-fourths  of  this  money  went,  not  to  support 
the  Government,  but  to  pay  for  castles  in  Scot- 
land and  coaching  tours  through  England  for 
rich  manufacturers  and  mine  owners.  This  is 
why  they  looked  so  closely  after  the  trifle  of 
local  taxes,  which  most  of  them  were  not  called 
upon  to  pay  at  all,  and  allowed  Congress  to 
build  up  the  tariff  as  if  it  were  making  laws  for 
the  moon. 


CHAPTER  XII. 

WAGES  AND  LABOR  COST. 

In  the  early  days  of  the  tariff  the  principal 
protectionist  argument  used  to  be  that  we 
needed  duties  because  European  countries  had 
so  much  more  capital  than  we  that  they  could 
freeze  us  out  of  business  if  we  allowed  them  to 
compete  with  us.  Now  that  the  United  States 
has  become  the  richest  country  in  the  world 
this  idea  has  been  dropped.  It  is  not  American 
capital,  but  American  labor  that  is  now  said  to 
need  protection.  European  manufacturers  hire 
their  workmen  at  low  wages,  while  American 
manufacturers  have  to  pay  high  wages.  This 
makes  American  goods  cost  more,  so  that  if 
people  were  allowed  to  buy  where  they  pleased 
they  would  buy  of  foreigners. 

At  the  bottom  of  this  idea,  of  course,  is  the 
belief  that  everything  is  made  by  labor.  In  a 
sense  this  is  true,  but  let  us  see  in  what  sense. 
If  you  go  into  the  Union  Iron  Works  you  will 
see  an  army  of  huge  machines  grinding,  plan- 
ing, polishing  and  boring  the  great  pieces  of 
metal  that  are  about  to  be  turned  into  ships  and 
engines. 

A  man  turns  a  handle  and  an  immense  cast- 
ing slides  into  place  under  a  drill.  The  drill 
begins  to  eat  into  the  iron  and  the  man  leaves 
it  and  feeds  another  machine.  At  the  proper 


WAGES   AND    LABOR   COST.  73 

time  he  comes  back  and  slides  the  casting  into 
a  new  position. 

This  man  is  paid,  perhaps,  $4  a  day.  An 
English  workman  in  his  position  might  get  $2 
a  day,  and  a  German  workman  $1.  But  the 
machines  which  he  has  attended  may  do  $100 
worth  of  work  in  a  day,  and  one  mistaken  turn 
of  a  lever  might  do  $1,000  worth  of  damage.  It 
is  not  muscle  work  this  man  is  doing,  but  head- 
work.  The  muscle  work  is  done  by  the  power 
of  steam.  The  slightest  difference  in  the  qual- 
ity of  the  head  work  would  amount  to  more  than 
the  whole  of  the  man's  wages.  If  the  factory 
were  run  on  the  easy-going  German  plan,  by 
which  one  man  looks  after  one  machine  and 
knocks  off  half  a  dozen  times  a  day  to  fill  his 
pipe  and  commune  with  his  beer  glass,  there 
might  be  a  saving  in  wages,  but  the  interest  on 
capital  would  be  running  on,  rents,  taxes  and 
insurance  would  have  to  be  paid,  fuel  would  be 
burning,  machinery  would  be  wearing  out  and 
the  returns  would  not  be  coming  in  to  meet  the 
expenses. 

It  is  a  safe  rule  that  that  labor  is  the  cheapest 
which  keeps  the  plant  of  a  factory  worked  up 
to  its  fullest  capacity  and  makes  the  fewest 
mistakes.  A  weaver  who  could  turn  out  a  lot 
of  cloth  without  a  flaw  would  be  cheap  at  the 
highest  wages  paid  in  the  trade,  while  one  who 
had  to  be  constantly  fined  for  imperfect  work 
would  be  dear  if  he  worked  for  nothing. 

The  cheapest  wheat  in  the  world  is  raised  in 
California,  where  wages  are  higher  than  almost 
anywhere  else.  It  is  so  for  the  very  reason  that 


74  THE   TAEIFF. 

wages  are  high,  and  therefore  every  care  is 
taken  to  make  labor  go  as  far  as  possible.  It  is 
true  that  harvest  hands  are  paid  $2  or  S3  a  day 
in  this  State,  while  they  can  be  had  in  Russia 
for  fifty  cents,  but  in  California  five  men  and  a 
dozen  horses  will  harvest  thirty  acres  of  grain 
a  day  with  a  header — a  job  that  would  take  the 
same  number  of  Russian  peasants  two  weeks  to 
get  through  with  their  sickles.  The  California!! 
farmer  can  make  money  raising  twenty  bushels 
of  wheat  to  the  acre  at  a  dollar  a  bushel — the 
English  farmer  loses  money  when  he  raises 
thirty  bushels  to  the  acre  at  $1.50.  The  differ- 
ence is  principally  due  to  the  fact  that  in  Cali- 
fornia the  laborer  is  not  really  a  laborer  at  all, 
but  a  superintendent  of  horses  and  steam  en- 
gines. 

That  is  what  new  inventions  are  tending  to 
make  the  laborer  everywhere.  We  can  easily 
imagine  a  time  when  every  bit  of  actual  work 
in  the  world  will  be  done  by  machinery,  and 
men  will  have  nothing  to  do  but  to  see  that  the 
machines  work  right.  When  that  time  comes 
the  fortunate  employer  will  be  the  one  who  has 
the  most  intelligent  and  faithful  men,  not  the 
one  who  pays  the  lowest  wages.  Everybody 
understands  even  now  that  the  poorest  economy 
is  to  hire  a  cheap  manager.  The  infant  insur- 
ance companies  of  California  do  not  complain 
that  their  great  rivals  of  New  York  are  able  to 
hire  Presidents  at  $15  a  week  and  actuaries  at 
$l.f)0  per  day.  There  are  factories  in  New  Eng- 
land which  paid  less  for  common  labor  in  1880 
than  they  had  paid  in  1860,  but  their  Superin- 


WAGES    AND    LABOR   COST.  75 

teiidents  were  getting  three  times  as  much. 
And  the  more  brains  can  be  mixed  in  with 
labor  of  all  kinds  the  higher  wages  can  employ- 
ers afford  to  pay. 

Americans  have  a  peculiar  knack  of  getting 
the  benefit  of  natural  forces,  of  organizing  in- 
dustry and  of  doing  things  on  a  large  scale. 
Wherever  this  quality  has  room  to  make  itself 
felt  Americans  can  undersell  the  world,  while 
paying  the  highest  rates  of  wages.  But  where 
there  is  no  chance  to  bring  this  genius  for  man- 
agement into  play  Americans  have  no  business 
to  be  wasting  their  time.  Our  great  factories 
can  turn  out  cheaper  watches  than  can  be  made 
anywhere  else  in  the  world,  because  one  of  them 
can  make  ten  thousand  timepieces  while  the  old- 
fashioned  hand-worker  of  Europe  is  pottering 
over  one.  But  it  would  not  pay  us  to  try  to 
raise  tea,  because  the  tedious  work  of  picking 
the  leaves  can  be  done  about  as  well  by  the 
cheap  labor  of  China  as  by  the  high-grade  labor 
of  America.  Hitherto  we  have  not  made  tin 
plates,  because  the  process  of  dipping  has  been 
too  slow  and  given  too  poor  returns  for  our  style 
of  work.  American  labor  can  be  used  to  better 
purpose  in  other  directions.  This  is  why  Welsh- 
men have  been  imported  to  set  the  industry  go- 
ing here.  But  if  we  find  that  new  inventions 
enable  the  dipping  to  be  done  by  machinery, 
then  American  workmen  will  take  the  lead  in 
this  enterprise,  as  they  have  in  others. 

As  a  general  rule  it  will  be  found  that  when 
working  people  of  one  country  are  paid  more 
than  in  another  it  is  because  they  earn  more. 


76  THE    TARIFF. 

The  rule  holds  good  even  in  so  simple  a  matter 
as  house  service.  In  England  servants  can  be 
hired  for  $5  a  month,  while  in  California  they 
expect  $20  to  $25.  But  one  servant  in  Califor- 
nia will  do  all  the  work  of  an  ordinary  family, 
while  an  English  family  in  a  corresponding 
position  would  have  to  hire  one  to  cook, 
another  to  wait  on  the  table,  another  to  an- 
swer the  bell,  another  to  wash  the  dishes  and 
another  to  clean  up  the  rooms,  and  any  one  of 
the  lot  would  leave  if  asked  to  do  anything  that 
belonged  to  the  duties  of  another.  Lord  Bras- 
sey  found  that  in  building  a  railroad  a  given 
amount  of  money  could  be  made  to  go  further 
in  hiring  English  workmen  than  in  hiring  twice 
the  number  of  Italians  at  half  the  wages,  and 
in  the  same  proportion  it  is  cheaper  to  hire 
Americans  than  Englishmen.  While  railroads 
on  the  Pacific  Coast  are  fond  of  hiring  Chinese 
section-hands  on  account  of  the  convenience  of 
dealing  with  them  in  gangs,  everybody  who  has 
watched  their  tender  way  of  handling  their 
shovels  knows  that,  as  far  as  actual  work  is  con- 
cerned, they  are  dearer  at  $1  a  day  than  white 
men  at  $2. 

Secretary  Blaine  once  called  attention  to  the 
fact  that  while  cotton  operatives  in  Massachu- 
setts were  generally  paid  a  few  cents  more  per 
week  than  in  England  they  worked  up  more 
than  twice  as  much  cotton  per  hand,  and  turned 
out  fifty  per  cent  greater  value  of  finished  goods. 
Labor  Commissioner  Carroll  D.  Wright,  in  his 
latest  report,  shows  that  while  wages  are  higher 
in  Northern  than  in  Southern  iron-works,  the 


WAGES  AND  LABOR  COST.  77 

actual  cost  of  labor  is  higher  in  the  South  than 
in  the  North. 

It  is  safe  to  say  that  in  the  long  run  workmen 
do  not  receive  more  pay  than  they  earn.  Wages 
are  not  a  gift  from  employers — they  are  a  share 
of  the  products  of  labor.  If  they  are  high  it  is 
because  much  has  been  produced.  When  Amer- 
ican workmen  understand  that  their  high  wa^es 
are  honestly  earned  and  are  independent  of  any 
pretended  help  from  politicians  at  Washington, 
they  will  insist  upon  getting  their  money's  worth 
for  what  they  spend  instead  of  supporting  a 
tariff  system  that  purports  to  mean  high  wages 
for  workers  and  really  means  high  prices  for 
capitalists. 


CHAPTER  XIII. 

HOW    MANY   ARE    PROTECTED  ? 

The  benefits  of  protection  are  something  like 
the  sea-serpent — they  are  always  somewhere 
else.  The  average  protectionist  believes  that 
the  tariff  raises  wages.  If  you  ask  him  how  it 
raises  his  wages  he  will  reply  that  it  does  so  in 
an  indirect  way  by  improving  the  condition  of 
some  other  person.  Now,  there  is  a  widely 
accepted  principle  to  the  effect  that  the  tail  can- 
not wag  the  dog.  If  the  persons  whose  wages 
are  directly  affected  by  the  tariff  very  greatly 
outnumber  those  who  have  nothing  to  do  with 
tariff  taxes  except  to  pay  them,  they  may  set 
the  standard  for  the  whole  community.  But  if 
the  directly  protected  classes  form  an  insignifi- 
cant minority  of  the  total  population,  it  is  clear- 
ly impossible  for  them  to  fix  the  rate  of  wages 
for  the  majority.  It  is  of  the  first  importance, 
therefore,  to  know  how  many  people  are  en- 
gaged in  producing  the  things  that  are  supposed 
to  be  protected  by  the  tariff,  as  compared  to  the 
number  of  people  whom  the  tariff  does  not  and 
cannot  affect  except  to  their  injury. 

Unfortunately,  the  census  returns  for  1890 
have  not  yet  been  published  with  sufficient  com- 
pleteness to  enable  a  calculation  to  be  made  for 
that  year.  The  census  of  1880  showed  that 
about  one  person  in  twenty  might  be  considered 

78 


HOW    MANY    ARE    PROTECTED?  79 

to  be  protected.  The  other  nineteen,  on  the 
McKinley  theory,  have  their  wages  sustained 
above  the  pauper  level  of  Europe  solely  by  the 
lifting  power  of  the  one.  This  would  seem  cal- 
culated to  strain  any  man's  strength,  even  if  the 
wages  of  the  one  were  higher  at  the  start  than 
those  of  the  nineteen,  but  when  we  consider  the 
fact  that  the  protected  industries  almost  inva- 
riably pay  lower  wages  than  the  unprotected, 
the  exploit,  if  it  be  really  accomplished,  proves 
conclusively  that  Kobert  Elsmere  was  mistaken 
in  denying  the  existence  of  miracles. 

Some  of  the  greatest  unprotected  industries 
have  come  into  existence  since  1880,  and  others 
have  been  developed  out  of  all  proportion  to  the 
general  increase  of  population.  Almost  all  the 
vast  industries  dependent  upon  electricity,  for 
instance,  are  the  growth  of  the  past  few  years. 
No  protection  is  possible  here,  but  the  taxes  on 
copper  and  other  necessary  materials  have  con- 
stantly tended  to  stunt  the  expansion  of  electri- 
cal enterprises.  The  single  unprotected  indus- 
try of  railroad  transportation  employs  about  a 
million  men — nearly  if  not  quite  as  many  as  are 
engaged  in  all  the  directly  protected  industries 
combined — and  the  number  of  railroad  em- 
ployees in  the  little  group  of  Middle  States,  com- 
prising New  York,  New  Jersey,  Pennsylvania, 
Delaware,  Maryland  and  part  of  West  Virginia, 
in  1889,  was  almost  as  great  as  in  the  whole 
United  States  in  1880. 

If  all  the  manufactures  of  the  country  were 
protected,  as  they  are  often  assumed  to  be,  only 
about  one  person  in  five  would  be  within  the 


80  THE    TARIFF. 

circle  of  tariff  bounties,  even  if  the  employers 
conscientiously  divided  the  profits  of  taxation 
among  their  workers.  But  what  is  not  gener- 
ally understood  is  the  fact  that  of  the  manufac- 
turing industries  themselves  only  a  small  frac- 
tion are  protected.  Although  the  returns  of  the 
last  census  have  not  been  published  for  the 
whole  country,  we  can  form  an  idea  of  the  gen- 
eral state  of  things  by  examining  the  statistics  of 
a  typical  manufacturing  city,  such  as  St.  Louis. 
The  manufacturing  establishments  of  St. 
Louis  in  1890  employed  93,610  hands.  Of  these 
55,507  were  engaged  in  industries  employing 
over  a  thousand  hands  each.  The  list  of  about 
two  hundred  minor  occupations  is  too  long  to 
be  examined  here,  but  the  proportions  of  pro- 
tected and  unprotected  workers  remain  about 
the  same  throughout.  Of  the  greater  industries 
the  following  may  be  called  protected : 

HANDS 

Boots  and  shoes,  factory  product 2,592 

Men's  clothing 5,003 

Malt  liquors 2,870 

Saddlery  and  harness 1,202 

Tobacco  working 4,058 


15,735 

Concerning  this  table,  it  may  be  remarked 
that  there  is  not  one  of  these  industries  that 
would  not  flourish  at  least  as  well  if  there  were 
no  tariff  at  all.  American  boots  and  shoes  are 
sold  all  over  the  world,  American  clothing  man- 
ufacturers would  profit  more  by  free  wool  than 


HOW    MANY    ARE    PROTECTED?  81 

they  would  lose  by  the  abolition  of  the  duties 
on  clothes,  the  St.  Louis  breweries  are  in  no 
danger  of  being  washed  away  by  a  freshet  of 
foreign  beer,  and  the  cowboy  who  sends  to  St. 
Louis  for  his  riding  outfit  would  not  bestride  an 
English  saddle  for  half  the  money.  But  waiv- 
ing all  this,  we  find  15,735  protected  workers 
out  of  55,507.  There  are  8,9:23  other  workers 
engaged  in  making  things  of  which  some  are 
sheltered  by  the  tariff  and  some  are  not.  These 
things  are : 

HANDS 

Foundry  and  machine-shop  products 6,345 

Furniture  factory  products 1,563 

Iron  work,  architectural  and  ornamental.   1,015 

8,923 

Some  of  the  products  of  the  foundries  and 
furniture  factories  of  St.  Louis  might  conceiv- 
ably be  imported;  the  rest  would  have  to  be 
made  on  the  spot,  whether  we  had  protection  or 
free  trade. 

The  rest  of  the  great  industries  of  St.  Louis, 
classed  by  the  census  as  manufacturing,  are 
totally  unprotected.  Here  is  the  list : 

HANDS 

Bread  and  other  bakery  products 1,434 

Brick  and  tile 1,952 

Carpentering 3,396 

Carriages  and  wagons 2,283 

Steam  railroad  cars 1,406 

Men's  clothing — custom  work  and  repair- 
ing    2,299 


82  THE   TARIFF. 

Dressmaking 1,047 

Confectionery 1,242 

Cooperage 1,008 

Planing  mill  products 1,587 

Masonry 4,606 

Painting  and  paper-hanging 2,183 

Plumbing  and  gas-fitting 1,047 

Printing  and  publishing 5,153 

Tin-smithing,  copper-smithing  and  sheet- 
iron  working 1,166 

30,849 

It  thus  appears  that  a  large  majority  of  the 
men  employed  in  the  manufacturing  industries 
of  a  manufacturing  city  are  entirely  unprotected. 
If  we  should  look  at  the  other  industries  of  the 
same  city — at  the  clerks,  the  day  laborers,  the 
drivers,  the  teachers,  the  lawyers,  the  merchants, 
the  bouse  servants  and  all  the  thousands  of  per- 
sons whose  occupations  cannot  possiby  be  con- 
nected with  foreign  imports — we  should  find 
the  proportions  enormously  increased.  But  it  is 
when  we  go  into  the  country,  among  the  farm- 
ers, that  the  real  insignificance  of  protection  as 
a  factor  in  promoting  prosperity  is  most  appar- 
ent. There  are  whole  States  in  which  a  search 
warrant  would  scarcely  bring  to  light  a  single 
person  gaining  any  direct  advantage  from  the 
tariff.  And  yet  in  these  very  States  the  voters 
have  insisted  upon  taxing  themselves  year  after 
year,  upon  the  theory  that  somebody  somewhere 
else  would  profit  by  their  sacrifices  and  give 
them  a  share  of  the  returns. 


CHAPTER  XIV. 

AMERICAN   TARIFFS PART    FIRST. 

In  the  early  days,  before  the  United  States 
had  been  heard  of,  each  American  colony  had 
its  own  tariff,  not  only  against  foreign  countries, 
but  against  its  neighbor  colonies.  In  some,  as 
in  Pennsylvania,  the  duties  were  protective — 
in  others,  as  in  Massachusetts,  they  were  merely 
for  revenue.  In  all  they  were  very  low  com- 
pared with  the  present  national  rates.  In 
Massachusetts  the  tax  was  only  one  quarter  of 
1  per  cent  on  everything.  In  Virginia  it  was  1 
per  cent.  In  Pennsylvania  it  was  assessed 
somewhat  on  the  plan  of  our  present  tariffs — so 
much  a  pound  on  some  things,  so  much  a  yard  on 
others,  so  much  per  cent  on  others — but  the 
duties  were  very  much  lower  than  the  Pennsyl- 
vanian  mill-owners  insist  upon  having  now. 
They  generally  amounted  to  about  7  or  8  per 
cent.  That  was  all  the  really  "infant"  indus- 
tries were  thought  to  need  then,  although  now 
that  they  are  full  grown  they  demand  ten  times 
as  much. 

We  did  a  good  deal  of  manufacturing  in  those 
days.  We  made  iron  and  sold  it  in  England. 
We  spun  and  wove  the  home-grown  wool  for 
our  homemade  clothes.  But  most  Americans 
were  farmers.  This  was  not  because  they  could 
not  carry  on  manufactures,  but  because  they 


84  THE    TARIFF. 

liked  farming  better  and  could  make  more 
money  at  it.  There  was  plenty  of  land  and 
anybody  could  be  independent.  Wages  were 
higher  than  anywhere  else  in  the  world.  There 
was  no  need  for  labor  unions,  for  if  a  man  did 
not  like  the  way  his  employer  treated  him  he 
could  leave  and  take  up  a  piece  of  land  of  his 
own.  Manufacturers  complained  loudly  of  this 
independence  of  labor,  and  insisted  that  some- 
thing ought  to  be  done  to  balance  the  attrac- 
tions of  the  farms.  And  as  all  the  countries  of 
Europe  were  trying  to  protect  their  manufac- 
tures by  high  duties  it  was  easy  to  make  people 
think  that  we  ought  to  do  the  same.  The  new 
Federal  Government  was  greatly  in  need  of 
money  and  the  only  way  it  could  raise  it  was  by 
a  tariff.  So  when  the  Constitution  was  formed 
the  States  agreed  to  give  up  their  right  to  lay 
duties  and  turn  it  over  to  Congress.  The  first 
United  States  Tariff  law  was  passed  in  1789. 
The  duties  under  it  ranged  from  5  to  15  per 
cent,  averaging  about  8-J.  The  principal  object 
of  the  bill  was  to  raise  money,  but  the  taxes 
were  so  arranged  as  to  put  something  in  the 
pockets  of  the  manufacturers  at  the  same  time. 
But  people  were  modest  in  those  days.  They 
did  not  ask  for  50,  100  and  200  per  cent  for 
their  infant  industries,  as  their  great-grand- 
children did  a  hundred  years  later.  They  were 
satisfied  with  7  or  8,  and  even  that  was  con- 
sidered so  high  that  there  was  much  discontent. 
The  New  England  people  were  especially  sore 
about  the  tax  on  molasses.  They  used  to  build 
ships  and  sail  them  to  the  West  Indies,  bring 


AMERICAN    TARIFFS PART    FIRST.  85 

home  cargoes  of  molasses,  turn  them  into  Med- 
ford  rum,  carry  that  to  the  coast  of  Africa,  trade 
it  for  slaves,  sell  them  in  the  West  Indies,  buy 
more  molasses,  make  more  rum,  and  so  keep 
swinging  round  the  circle  indefinitely.  Their 
great  industries  were  commerce  and  fishing, 
and  they  objected  to  any  taxes  that  interfered 
with  them.  But  Pennsylvania  and  the  other 
Middle  States  succeeded  in  getting  their  little 
protective  tariff  through.  In  reality,  however, 
the  formation  of  the  new  government  was  the 
greatest  advance  for  free  trade  that  has  ever 
been  known  in  the  world.  It  destroyed  all  the 
tariffs  that  had  interfered  with  trade  among 
Americans  and  made  a  constantly  growing  ter- 
ritory entirely  free. 

But  after  the  modest  little  8  per  cent  tariff  of 
1789  was  secured  the  manufacturers  were  not 
satisfied.  As  the  infant  industries  grew  older 
and  stronger  they  seemed  to  be  in  need  of  more 
and  more  nursing.  Between  1789  and  1816 
seventeen  tariff  acts  were  passed,  most  of  them 
increasing  the  duties.  Besides,  the  duties  in- 
creased themselves  in  many  cases  without  any 
change  in  the  law.  Manufactured  goods  gener- 
ally tend  to  become  cheaper  as  improved  ways 
of  making  them  are  introduced.  But  when 
taxes  are  laid  by  the  pound  or  the  yard,  instead 
of  by  the  dollar's  worth,  they  become  higher  in 
proportion  as  the  price  falls.  For  instance,  if 
we  could  buy  steel  rails  in  England  at  a  certain 
time  for  $100  a  ton,  a  duty  of  $28  per  ton  would 
have  amounted  to  28  per  cent.  But  later 
when  the  price  abroad  went  down  to  $50 


86  THE    TARIFF. 

per  ton,  the  same  duty  would  have  amounted  to 
twice  as  much  as  before,  or  56  per  cent. 
By  all  these  means  together  our  early  duties 
were  pushed  up  until  by  1802  they  averaged 
19.45  per  cent.  The  item  of  hats  will  do  for  a 
sample  of  the  general  course  of  things.  In  1789 
the  duty  on  hats  was  fixed  at  7£  per  cent.  In 
1792  it  was  raised  to  10,  in  1794  to  15,  in 
1804  to  17i,  in  1812  to  35,  and  in  1824  straw  hats 
were  taxed  at  50  per  cent.  Boots  started  in  1789 
at  50  cents  a  pair,  and  in  1816  they  were  paying 
$1.50,  in  spite  of  the  improvement  in  manufac- 
ture. Loaf  sugar  was  pushed  up  from  3  cents 
a  pound  in  1789  to  12  cents  in  1816.  Unwrought 
steel  began  at  56  cents  per  hundred  pounds  in 
1789,  and  climbed  up  to  75  cents  in  1790,  $1 
in  1792  and  $1.50  in  1828. 

In  1807  the  United  States  reached  that  condi- 
tion which,  on  protectionist  ideas,  ought  to  be 
the  happiest  a  nation  can  find.  Its  foreign  com- 
merce was  destroyed.  To  resent  the  injuries 
inflicted  on  us  by  England  and  France  our  ports 
were  closed,  and  ships  in  the  foreign  trade  were 
forbidden  either  to  come  in  or  to  go  out.  Then 
home  industry  should  have  leaped  forward,  and 
the  country  should  have  thrilled  with  prosper- 
ity. But  things  turned  out  differently.  The 
chill  of  death  settled  on  the  nation,  and  not  un- 
til the  embargo  was  raised  did  prosperity  revive. 

In  1812  the  duties  were  doubled  all  round. 
This  was  done  to  raise  money  for  the  war  with 
England,  and  was  not  meant  to  last,  and  more- 
over it  was  balanced  by  internal  revenue  taxes 
on  home  manufactures.  But  between  the  war 


AMERICAN   TARIFFS — PART   FIRST.  87 

and  the  taxes  our  foreign  trade  was  so  nearly 
cut  off  that  our  people  got  to  making  a  good 
many  things  at  home  which  they  had  formerly 
bought  abroad.  When  peace  came  again  in 
1815  commerce  of  course  revived.  Merchant 
ships  were  no  longer  captured,  the  duties  were 
lowered  to  the  old  rates,  and  we  bought  and 
sold  as  before.  This  annoyed  the  manufactur- 
ers, who  had  enjoyed  a  monopoly  of  the  Ameri- 
can market,  and  they  demanded  a  new  tariff. 
They  got  it  in  1816. 


CHAPTER  XV. 

AMERICAN   TARIFFS — PART    SECOND. 

The  tariff  of  1816  is  commonly  considered  the 
beginning  of  our  modern  protective  system, 
although  a  mild  one.  It  was  supported  by 
Calhoun  and  other  Southern  leaders,  who  after- 
ward became  free  traders.  They  favored  it 
because  they  wanted  a  better  market  for  cotton, 
which  was  still  one  of  the  industrial  infants, 
protected  by  a  duty  of  3  cents  a  pound,  and  also 
because  they  had  the  idea,  very  common  at  that 
time,  that  protection  was  necessary  to  give  a 
nation  commercial  independence. 

Soon  after  the  passage  of  the  new  Tariff  bill 
times  became  very  hard,  but  it  would  be  a  mis- 
take to  lay  this  either  to  the  protective  system 
or  to  the  removal  of  the  war  taxes.  It  was 
caused  principally  by  the  trouble  in  getting 
down  from  an  inflated  paper  currency  to  a  coin 
basis,  although  the  loss  of  the  foreign  markets 
for  grain  and  provisions  had  much  to  do  with  it. 

In  1824  there  was  another  large  raise  in  the 
duties.  The  leader  in  the  new  protective  move- 
ment was  Henry  Clay,  who  christened  his  scheme 
the  "American  System,"  apparently  because 
there  was  nothing  American  about  it.  Up  to  this 
time  the  trade  of  the  United  States  had  been 
freer  than  that  of  any  other  great  country  in  the 
world,  and  one  of  Clay's  principal  arguments 


AMERICAN   TARIFFS — PART    SECOND.  89 

was  that  as  England  was  rich  and  had  a  high 
tariff  we  ought  to  follow  her  example.  He  still 
held  to  the  infant  industry  idea,  and  said,  as 
Garfield  did  later,  that  the  kind  of  protection  he 
wanted  was  the  kind  that  would  lead  to  free 
trade.  Massachusetts  and  South  Carolina  were 
united  in  opposing  this  tariff — Massachusetts 
because  she  knew  it  would  damage  her  shipping 
interest,  and  South  Carolina  because  the  cotton 
planters  had  come  to  see  that  they  were  depend- 
ent upon  a  foreign  market.  The  bill  was  passed 
by  the  almost  solid  vote  of  the  manufacturing 
and  grain-growing  States,  and  was  opposed  by 
the  navigating,  fishing,  tobacco,  cotton  and 
sugar  States.  The  grain-growers  were  uneasy 
at  that  time  about  their  foreign  markets,  and 
believed  the  protectionist  promises  that  a  high 
tariff  would  enable  them  to  sell  everything  they 
raised  at  home.  That  was  nearly  seventy  years 
ago.  Two  generations  of  farmers  have  lived 
and  died  since  then  and  we  still  sell  a  third  of 
our  wheat  crop  abroad. 

In  1825-26  there  was  a  panic.  The  hard 
times  bore  particularly  upon  the  woolen  manu- 
facturers. Protection  is  like  opium — it  has  to 
be  taken  in  continually  larger  doses.  The 
woolen  men  clamored  for  more  protection. 
They  called  a  convention,  which  expanded 
their  demands  into  a  complete  new  tariff. 
Owing  to  the  approach  of  a  Presidential  elec- 
tion and  the  supposed  strength  of  the  protec- 
tionist feeling  in  the  doubtful  States,  no  party 
liked  to  go  on  record  as  opposing  protection, 
but  the  Jacksonians  in  Congress  loaded  the 


90  THE   TARIFF. 

proposed  new  tariff  bill  with  all  sorts  of  absurd 
provisions,  especially  disagreeable  to  New 
England,  in  the  hope  that  the  members  from 
that  section  would  defeat  it.  But  enough  New 
Englanders  voted  for  the  bill,  with  all  its  de- 
formities, to  put  it  through.  By  this  time  Web- 
ster had  come  round  to  the  support  of  a  high 
tariff,  explaining  that  it  was  not  because  he 
believed  in  the  principle,  but  because  the 
former  course  of  the  Government  had  forced 
Massachusetts  to  turn  her  attention  from  com- 
merce and  shipping  to  manufactures,  and  her 
capital  had  now  been  invested  in  that  quarter. 
Nobody  was  pleased  with  the  new  law,  and  its 
oppressive  features  gave  it  the  name  of  "  Tariff 
of  Abominations." 

This  tariff  served  its  political  purpose,  but  it 
almost  plunged  the  country  into  civil  war.  The 
cotton  States,  led  by  South  Carolina,  angrily 
protested  against  it,  and  although  the  "abomi- 
nations" began  to  be  cleared  out  as  early  as 
1830,  and  were  almost  entirely  removed  in 
1832,  the  Southerners  would  not  be  pacified. 
South  Carolina  refused  to  allow  the  duties  to 
be  collected  within  her  limits,  and  while  Con- 
gress passed  a  bill  to  enforce  the  laws  it  saw 
that  the  taxes  must  be  still  further  reduced. 
So  in  1833,  Henry  Clay  introduced  a  bill  provid- 
ing for  a  steady  reduction  of  duties  until  there 
were  none  higher  than  20  per  cent.  This  point 
was  to  be  reached  in  nine  years,  and  Clay  said 
that  by  that  time  our  manufactures  ought  to  be 
strong  enough  to  stand  alone. 

In  1837  there  was  a  general   panic  all  over 


AMERICAN    TARIFFS — PART    SECOND.  91 

the  world.  It  was  caused  by  over-speculation 
and  the  abuse  of  credit.  In  this  country  it  was 
made  worse  by  the  collection  of  money  through 
the  tariff,  greatly  in  excess  of  the  needs  of  the 
Government,  and  its  distribution  among  the 
States,  by  which  extravagance  and  reckless 
borrowing  were  promoted — the  people  having 
the  idea  that  the  National  Treasury  was  going 
to  make  them  all  rich. 

In  1842  the  duties  under  the  Compromise 
tariff  had  reached  their  lowest  point,  but  two 
months  later  Congress  raised  them  again.  The 
tariff  of  1842  was  the  last  protective  tariff  we 
had  before  the  war  and  it  lasted  only  four 
years.  Its  rates  were  generally  much  lower 
than  those  of  the  Mills  bill.  Wool  blankets 
were  taxed  at  25  per  cent,  mohair  blankets  15, 
carpets  in  general  30,  cotton  manufactures  30, 
sheetings  25,  and  woolen  manufactures  40  per 
cent.  Many  of  the  taxes  which  would  seem 
high  now  were  low  then  on  account  of  the 
higher  prices  of  the  things  on  which  they  were 
levied.  For  instance,  bar  iron  was  taxed  at  $25 
per  ton,  against  from  $15.68  to  $22.40  in  the 
Mills  bill.  But  when  bar  iron  was  selling  at 
$100  a  ton  a  duty  of  $25  was  only  25  per  cent, 
while  with  iron  worth  $45  a  tax  of  $20  would 
be  nearly  45  per  cent. 

This  tariff  was  the  work  of  the  Whig  party, 
the  high  protectionist  party  of  that  day.  When 
the  Democrats  came  into  power  they  lowered 
it  to  the  rates  they  thought  would  bring  in 
most  revenue,  without  regard  to  protection. 
For  the  first  time  since  1789  raw  cotton 


92  THE    TARIFF. 

was  put  on  the  free  list,  and  cotton  goods  were 
taxed  at  from  20  to  30  per  cent.  No  manufac- 
tures of  wool,  leather,  copper,  lead,  iron  or 
steel  were  made  to  pay  more  than  30  per  cent. 

These  duties  brought  in  so  much  money  that 
the  Government  was  soon  richer  than  it  had 
ever  been  before.  The  income  from  customs 
steadily  rose  from  $23,747,864.66  in  1847  to 
$64,224,190.27  in  1854.  Trade  grew  in  pro- 
portion. Our  exports  tripled  in  ten  years,  and 
our  imports  almost,  but  not  quite,  kept  up  with 
them.  Times  were  good  and  everybody  was 
satisfied.  The  protectionist  sentiment  gradu- 
ally died  out,  until  by  1856  there  was  practically 
none  of  it  left. 


CHAPTER  XVI. 

AMERICAN   TARIFFS — PART    THIRD. 

The  first  Republican  National  Convention, 
held  in  1856,  did  not  mention  the  tariff.  The 
Democratic  Convention  appealed  to  our  "suc- 
cessful example"  as  an  argument  in  favor  of 
"progressive  free  trade  throughout  the  world." 
A  Pennsylvanian  stood  on  this  platform  and 
Pennsylvania  gave  him  her  votes.  Protec- 
tion seemed  finally  dead.  The  next  year,  so 
well  had  the  low  duties  worked,  it  seemed  time 
to  make  them  still  lower. 

The  first  House  controlled  by  the  Republican 
party  passed  the  Tariff  of  1857,  under  which 
the  duties  were  lower  than  they  had  ever  been 
before  since  the  beginning  of  the  century.  The 
Republicans  were  divided  on  the  question.  Mas- 
sachusetts cast  her  solid  vote  in  favor  of  this 
tariff.  So  did  Maine.  In  the  Senate  Charles 
Sumner,  Henry  Wilson,  Hamilton  Fish  and 
other  Republican  Senators  voted  for  it.  It  was 
called  the  "Manufacturers'  Tariff,"  because  it 
was  asked  for  by  the  cotton  and  woolen  manu- 
facturers, who  had  decided  that  wide  markets 
were  better  for  them  than  high  protection.  It 
reduced  the  duties  on  manufactures  of  iron 
and  steel  to  24  per  cent,  on  those  of  cotton 
and  wool  to  from  15  to  24  per  cent,  and 
on  steel  ingots  to  12  per  cent.  Under  it  the 


94  THE   TARIFF. 

duties  on  all  the  goods  we  imported  in  1860 
averaged  15.67,  and  on  the  dutiable  goods  alone 
19.67  per  cent. 

In  the  fall  of  1857,  before  the  new  tariff  had 
begun  to  produce  any  effects,  there  was  a  sharp 
financial  panic  caused  by  over-speculation,  and 
extending  all  over  the  world.  It  was  felt 
much  more  severely  in  Europe  than  here.  In 
England  wages  were  reduced  about  25  per 
cent,  but  in  America  wages  and  general  busi- 
ness hardly  suffered  at  all.  The  speculators 
soon  straightened  out  their  books,  and  in  a  few 
months  the  country  was  more  prosperous  than 
ever.  But  the  Government  was  in  trouble.  It 
had  been  supposed  that  when  the  duties  were 
reduced  enough  more  foreign  goods  would  be 
bought  to  keep  up  the  income  at  the  custom- 
houses. But  things  did  not  turn  out  that  way. 
Our  people  bought  less  than  ever  abroad,  and 
consequently  less  duties  were  collected  and  the 
Government  ran  short  of  money.  It  seemed 
necessary  to  increase  the  rates,  not  for  protec- 
tion, but  to  raise  more  money,  and  the  resigna- 
tion of  most  of  the  Southern  Senators  and  Rep- 
resentatives after  the  secession  of  their  States 
in  the  winter  of  1860,  left  Congress  under  the 
control  of  men  who  took  advantage  of  the  oppor- 
tunity to  make  the  increase  on  protective  lines. 
The  Morrill  tariff  was  passed — the  first  of  that 
long  series  of  war  tariffs  that  has  lasted  to  the 
present  day. 

Although  the  Morrill  tariff  is  commonly  spo- 
ken of  as  an  example  of  extreme  protection,  it 
was  low  compared  to  that  under  which  we  are 


AMERICAN   TARIFFS — PART    THIRD.  95 

living  now.  It  fixed  the  duties  on  raw  wool  at 
from  5  per  cent  to  9  cents  a  pound,  against 
from  32  per  cent  to  36  cents  a  pound  in  the  Mc- 
Kinley  bill.  Cheap  woolen  blankets  were  taxed 
at  6  cents  per  pound  and  10  per  cent,  while  the 
McKinley  bill  charges  them  16|  cents  a  pound 
and  30  per  cent.  The  duties  on  manufactures 
of  iron  averaged  about  25  per  cent,  against  from 
45  to  over  100  per  cent  at  present. 

As  the  war  made  constantly  new  demands  for 
money  these  taxes  were  steadily  increased.  The 
country  had  its  eyes  fixed  on  the  soldiers,  and 
all  it  cared  about  the  tariff  was  to  have  it  high 
enough  to  bring  in  all  the  revenue  possible. 
But  the  high  duties  were  balanced  by  internal 
revenue  taxes  on  American  manufactures.  It 
was  understood  that  as  soon  as  the  war  was 
over  these  taxes  would  be  removed  and  the 
duties  would  go  down  with  them.  The  first 
part  of  this  promise  was  kept.  The  internal  rev- 
enue taxes  on  manufactures  were  taken  off  as 
soon  as  the  money  they  brought  in  was  no 
longer  needed,  but  the  manufacturers  were 
able  to  keep  the  duties  as  high  as  ever.  Thus 
their  protection  was  immensely  increased  with- 
out the  public  generally  finding  it  out.  Slight 
changes  were  made  from  time  to  time,  but 
usually  in  the  direction  of  taking  off  revenue 
duties  while  leaving  those  for  protection  about 
as  high  as  ever,  or  higher.  From  1864  to 
1867  the  wool  duties  were  greatly  increased. 
In  1872  tea  and  coffee  were  put  on  the  free  list. 
In  the  same  year  the  duties  on  many  manufac- 
tured articles  were  reduced  by  10  per  cent,  but 


Ub  THE    TARIFF. 

in  1874  the  old  rates  were  restored.  In  1882 
there  was  a  general  demand  for  lower  duties, 
and  a  Tariff  Commission  of  ardent  protectionists 
was  appointed  to  study  the  question  and  report 
a  bill  that  would  satisfy  the  people  without 
really  giving  up  anything.  But  when  the  com- 
mission had  looked  into  the  matter  it  proposed 
greater  reductions  than  the  Republican  Congress 
had  any  idea  of  allowing.  So  a  bill  was  patched 
up,  making  some  very  slight  reductions,  and  in 
some  cases  increasing  the  taxes.  For  instance, 
the  duty  on  works  of  art  was  raised  from  10 
to  30  per  cent  against  the  protests  of  all  the  ar- 
tists in  the  country,  and  a  conference  commit- 
tee fixed  the  tax  on  iron  ore  at  75  cents  per 
ton  to  please  Senator  Mahone  of  Virginia,  after 
both  Houses  had  voted  to  make  it  50  cents. 

Nobody  was  satisfied  with  this  tariff,  and  the 
agitation  for  a  real  reform  continued.  Bills 
bringing  the  taxes  nearer  to  a  peace-footing, 
although  still  leaving  them  higher  than  the  old 
protectionists,  from  Hamilton  to  Clay,  would 
have  put  them,  were  proposed  by  Morrison  and 
Mills,  but  failed  to  become  laws.  At  last,  in 
1890,  the  protectionists  took  advantage  of  their 
control  of  Congress  and  the  Presidency  to  pass 
the  highest  tariff  in  American  history — the  Me 
Kinley  bill,  which  deserves  a  chapter  to  itself. 


CHAPTER  XVII. 
THE  M'KINLEY  BILL — PART  FIRST. 

The  McKinley  law  is  the  highest  form  of  pro- 
tection yet  tried  in  this  country.  It  must  be 
carefully  studied  to  be  well  understood,  for  it 
does  not  carry  its  full  meaning  on  its  face.  It 
is  full  of  little  tricks  and  surprises.  One  of  the 
tools  it  finds  most  useful  is  the  change  from 
"ad  valorem"  to  "specific"  duties — that  is, 
from  duties  figured  by  the  dollar's  worth  to 
those  figured  by  the  pound,  yard  or  barrel. 
When  Congress  lays  a  tax  of  40  per  cent  on 
any  article  we  know  that  we  must  pay  40  cents 
on  the  dollar's  worth  of  goods,  whether  they  be 
dear  or  cheap.  Such  a  tax  is  less  on  the  coarse 
things  used  by  the  poor  than  it  is  on  the  fine 
things  used  by  the  rich,  and  if  people  learn  to 
make  things  more  cheaply  than  before,  so  that 
the  prices  go  down,  the  tax  goes  down  too. 
But  when  Congress  says  that  a  certain  kind  of 
cloth  shall  pay  40  cents  per  square  yard,  the 
tax  is  the  same  whether  the  quality  be  fine  or 
coarse.  On  cloth  worth  a  dollar  a  yard  the  tax 
would  be  40  per  cent,  just  as  in  the  other  case, 
but  if  the  price  abroad  went  down  to  40  cents  it 
would  be  100  per  cent,  while  on  cloth  worth  $2 
it  would  be  only  20  per  cent. 

Another  favorite  trick  of  the  McKinley  bill  is 
to  leave  out  certain  articles  altogether,  so  that 

97 


98  THE    TARIFF. 

they  will  be  taxed  higher  than  before  under 
some  general  heading.  Another  is  to  reduce 
the  rates  on  things  of  which  we  buy  very  little 
and  raise  them  on  things  of  which  we  buy 
a  great  deal.  This  was  probably  borrowed  from 
contractors,  who,  when  they  make  bids  for  fur- 
nishing public  supplies,  often  make  the  average 
of  their  bids  seem  low  by  offering  mustard  and 
pepper  at  prices  far  below  the  market  rates 
while  they  charge  extra  prices  for  beef  and 
flour. 

The  McKinley  law  contains  472  paragraphs, 
beside  the  free  list  and  the  general  provisions. 
It  raises  duties  directly  in  233  cases  and  reduces 
them  in  219.  In  addition  it  changes  the  taxes 
from  ad  valorem  to  specific  in  186  cases,  and  the 
worst  impositions  of  the  whole  bill  are  found  in 
these  changes,  which  almost  always  mean  large 
increases. 

The  first  schedule  deals  with  chemicals,  oils 
and  paints.  We  find  that  Mr.  McKinley  has 
reduced  the  taxes  on  acetic  acid,  tannic  acid, 
sulphate  of  copper,  refined  camphor  and  various 
other  things  of  which  we  hardly  import  any 
from  one  year  to  another.  On  almost  all  the 
important  items  he  has  either  left  the  war 
duties  as  they  were  or  has  increased  them.  For 
instance,  he  has  put  a  tax  of  one-fourth  of  a 
cent  a  pound  on  sulphuric  acid,  which  was  free 
before.  This  acid  is  used  by  thousands  of 
tons  in  making  commercial  fertilizers  for 
farmers;  it  is  made  very  cheaply,  and  the  least 
increase  in  its  price  means  a  heavy  addition  to 
the  cost  of  raising  crops  by  such  means.  When 


THE  M'KINLEY  BILL — PART  FIRST.          99 

the  importance  of  this  item  to  farmers  was 
pointed  out,  Mr.  McKinley  inserted  an  amend- 
ment putting  on  the  free  list  certain  low  grades 
of  sulphuric  acid,  avowedly  for  use  in  the  manu- 
facture of  fertilizers,  but  which  experts  say  are 
of  no  value  at  all  for  that  purpose. 

A  cent  a  pound  has  been  added  to  the  duty  on 
commercial  boracic  acid,  for  the  benefit  of  the 
Borax  Trust,  which  is  able  to  sell  borax  all 
over  the  world  cheaper  than  it  can  be  furnished 
by  anybody  else.  There  is  a  large  increase  in 
the  tax  on  linseed  oil,  by  which  another  trust 
is  helped  at  the  expense  of  everybody  that  uses 
paint  or  putty.  The  duties  on  all  lead  products 
are  left  as  high  as  before,  and  on  one  of  them — 
orange  mineral — are  increased.  All  of. these 
things  are  controlled  by  one  of  the  most  power- 
ful trusts  in  the  country.  The  owner  of  one  of 
the  factories  in  the  Lead  Trust  said  that  he 
could  furnish  another  plant  exactly  like  his  for 
$200,000,  In  the  trust  that  factory  is  valued 
at  $1,000,000  and  dividends  on  that  amount 
are  paid  by  increasing  the  price  of  the  product. 

These  are  only  samples  of  the  chemical 
duties,  almost  every  one  of  which  conceals  a 
job  for  the  benefit  of  some  firm  or  combination. 
The  cost  of  the  labor  employed  in  making  these 
articles  usually  ranges  from  8  to  12  per  cent. 
The  taxes  go  from  10  to  1,000  per  cent. 

Passing  to  the  next  section,  e '  earths,  earthen- 
ware and  glassware,"  we  find  that  out  of  thirty- 
five  changes  in  the  old  rates  there  is  only  one 
single  reduction.  That  is  a  cut  in  the  duty  on 
millstones  from  20  to  15  per  cent.  Anj 


100  THE    TARIFF. 

who  finds  the  regular  use  of  millstones  neces- 
sary to  his  comfort  may  get  some  benefit  from 
this  part  of  the  McKinley  bill.  The  taxes  are 
raised  on  firebrick,  cement,  lime,  plaster,  small 
glass  bottles,  pressed  and  cut  glassware,  lamp 
chimneys,  porcelain  and  opal  glassware,  large 
window  glass,  small  looking-glass  plates,  spec- 
tacles, eyeglasses  and  almost  everything  else  un- 
der this  heading.  Imported  Portland  cement  is 
often  required  by  architects  for  the  sake  of 
safety.  Under  the  McKinley  bill  contractors  must 
either  pay  heavy  fines  for  using  it  or  they  must 
get  along  with  a  cheaper  and  more  dangerous 
article  bought  at  home.  The  new  tax  on  lime 
is  for  the  benefit  of  a  trust  in  Maine  that  con- 
trols the  entire  American  supply.  On  common 
lamp-chimneys,  opal  glassware,  etc.,  on  which 
the  duties  used  to  be  40  and  45  per  cent,  Mr. 
McKinley  first  fixed  taxes  of  200  to  400  per 
cent,  but  after  his  bill  had  been  discussed  in  the 
Senate  for  some  months  he  agreed  to  let  them 
go  at  60.  But  as  people  who  buy  foreign  glass- 
ware under  the  new  law  get  no  allowance  for 
things  that  are  broken  on  the  way,  the  duties 
really  amount  to  at  least  75  per  cent. 

One  of  the  leading  manufacturers  of  Pitts- 
burg,  making  over  a  hundred  different  kinds  of 
glassware,  explained  that  he  would  not  need  a 
particle  of  protection  in  his  business  if  he  could 
get  his  raw  materials  free.  He  said  that  he 
would  be  willing  to  take  free  trade  all  around 
and  pay  higher  wages  than  before.  Labor,  he 
declared,  cost  him  less  than  European  manufac- 
turers had  to  pay,  because  it  was  so  efficient 


THE  M'KINLEY  BILL — PART  FIRST.         101 

and  so  well  organized.  In  his  mill  each  branch 
of  the  trade  was  carried  on  by  somebody  especi- 
ally fitted  for  it.  Cheap  boys  did  cheap  work, 
and  high-class  work  was  done  by  highly  paid 
men.  In  Germany  a  skilled  laborer  earning 
about  half  as  much  as  an  American  skilled 
laborer  wastes  part  of  his  time  in  doing  boys' 
work,  and  so  is  more  expensive  to  his  employer 
than  the  American  workman. 

The  next  schedule  of  the  McKinley  bill,  deal- 
ing with  metals,  is  very  artfully  drawn.  It 
makes  a  number  of  reductions.  For  instance, 
the  rate  on  steel  rails  is  cut  down  from  $17  to 
$13.44  per  ton  ;  that  on  heavy  forgings  for  ves- 
sels and  engines  from  $44.80  to  $40.32,  and  that 
on  iron  and  steel  axles  from  $56  to  $44.80.  But 
these  reductions  were  carefully  arranged  so  as 
not  to  cut  into  the  prices  of  the  home  manufac- 
turers. American  prices  of  steel  rails  usually 
run  about  $10  a  ton  higher  than  English  prices. 
That  almost  covers  the  entire  cost  of  all  the 
labor  used  in  the  manufacture,  from  the  time 
the  miners  begin  to  dig  out  the  coal  and  iron  ore 
until  the  finished  rails  are  turned  out  of  the  roll- 
ing mill.  The  difference  in  cost  between  Eng- 
lish and  American  labor  in  many  establishments 
is  not  over  25  cents  a  ton.  The  new  duty  of 
813.44  a  ton  allows  the  manufacturers  to  charge 
just  as  much  as  they  could  get  without  killing 
their  market,  even  if  the  tax  were  doubled. 

These  reductions,  that  count  for  so  little,  have 
been  made  to  cover  a  number  of  increases  that 
count  for  a  good  deal.  One  of  them  is  that  on 
tin  plates,  from  1  cent  to  2.2  cents  per  pound. 


102  THE    TARIFF. 

We  import  about  700,000,000  or  800,000,000 
pounds  of  tin  plate  a  year,  and  the  tax  at  the 
new  rate  will  amount  to  $15,000,000  or  $20,- 
000,000.  If  we  keep  on  importing,  this  money 
will  go  into  the  Treasury,  which  may  not  be  so 
very  bad.  But  if  the  Welsh  makers  are  induced 
to  move  their  factories  over  here  it  will  go  into 
their  pockets.  It  is  said  that  if  we  made  all 
our  tin  plates  in  this  country  30,000  men  would 
be  employed  in  the  work.  Twenty  million  dol- 
lars a  year  in  new  taxes  would  support  more 
than  that  number  of  men  in  idleness  and  leave 
us  the  money  we  have  formerly  spent  for  our 
tin  plates  besides. 

The  Southern  planter  raises  cotton  and  sells 
it  at  free-trade  prices.  There  is  no  duty  on  it. 
But  the  cotton  has  to  be  baled  with  iron  ties, 
and  the  McKinley  bill  has  about  doubled  the 
taxes  on  those.  The  duties  on  cheap  pocket- 
knives  have  been  raised  in  some  cases  to  150 
per  cent.  Cheap  shotguns,  such  as  farmers' 
boys  use  to  shoot  squirrels,  have  been  taxed 
at  about  twice  or  three  times  the  former  rates. 
Aluminium  used  to  be  free.  Now  that  cheap 
methods  of  producing  it  are  being  discovered 
and  it  seems  likely  to  come  into  general  use,  Mr. 
McKinley  makes  it  pay  a  duty  of  15  cents  a 
pound.  Silver  ore  is  taxed  a  cent  and  a  half  a 
pound  on  the  lead  it  contains.  This  has  already 
ruined  a  large  part  of  our  Mexican  trade,  built 
up  several  large  smelters  in  Mexico  and  greatly 
damaged  American  smelters  employing  thou- 
sands of  men. 


—PART    FIRST.  103 

The  changes  in  the  wood  schedule  are  few 
and  not  important. 

When  we  come  to  sugar  we  find  the  only 
really  great  reduction  of  taxes  in  the  entire  bill. 
Raw  sugar  is  put  on  the  free  list  and  refined 
sugar  is  taxed  at  half  a  cent  a  pound.  The 
Sugar  Trust  buys  raw  sugar  and  refines  it  at  a 
cost  about  equal  to  the  duty.  Thus,  even  if  for- 
eign refiners  did  not  have  to  pay  a  cent  for 
labor,  fuel  or  any  other  working  expenses,  the 
tax  would  be  enough  to  keep  them  out  of  the 
American  market.  Under  the  old  tariff  we  im- 
ported in  1890  2,606,996,509  pounds  of  raw 
sugar  and  raised  371,378,560  pounds  at  home. 
The  Government  collected  over  $55,000,000  in 
duties,  and  the  growers  received  $6,000,000  or 
$7,000,000  in  increased  prices.  Thus  nine- 
tenths  of  all  the  sugar  taxes  collected  from 
the  people  went  into  the  public  treasury.  The 
new  law  cuts  off  all  the  Government's  income 
from  that  source  and  nearly  doubles  the  amount 
to  be  paid  to  private  parties.  It  provides  for 
a  bounty  of  two  cents  a  pound  on  all  the  sugar 
produced  in  the  country,  including  maple  su- 
gar, which  is  made  by  simply  boring  holes  in 
trees  and  boiling  down  the  sap,  and  this  bounty, 
which  amounts  to  about  $10,000,000  this  year, 
must  be  raised  by  other  taxes.  One  man  in 
Louisiana  has  received  a  check  for  about  $200,- 
000  of  it.  If  we  should  raise  all  the  sugar 
we  used  the  bounty  would  amount  to  over 
$70,000,000  a  year. 


CHAPTER  XVIII. 
THE  M'KINLEY  BILL — PART  SECOND. 

Next,  the  McKinley  bill  deals  with  tobacco. 
It  raises  the  duties  on  leaf  tobacco  suitable  for 
cigar  wrappers  from  75  cents  and  $1  to  $2  and 
$2.75  a  pound.  The  reason  for  this  is  that  there 
is  a  peculiar  kind  of  leaf  grown  in  Sumatra  so 
convenient  for  wrapping  cigars  that  it  seems 
almost  to  have  been  created  for  that  purpose. 
It  is  thin,  tough  and  flexible  and  can  be  handled 
as  easily  as  paper.  When  cigar  makers,  especi- 
ally in  San  Francisco,  could  get  this  material 
they  had  no  use  for  the  stuff  raised  in  Connecti- 
cut ;  so  Mr.  McKinley  provided  that  if  they  did 
not  patronize  the  Connecticut  growers,  and  pay 
the  railroads  for  bringing  the  inferior  wrappers 
across  the  continent,  they  should  be  fined  three 
times  the  former  rates  for  buying  in  Sumatra. 
Moreover,  if  a  bale  of  common  tobacco,  dutiable 
at  35  to  50  cents  a  pound,  should  happen  to  con- 
tain a  single  leaf  that  might  be  used  for  a  wrap- 
per, the  entire  bale  is  to  be  taxed  at  $2  a  pound 
if  unstemmed  or  $2.75  if  stemmed.  This  was 
aimed  particularly  at  the  Sumatra  wrappers, 
but  it  hit  cigar  makers  everywhere,  especially 
those  of  Key  West,  who  live  almost  within  sight 
of  Havana,  and  who  would  as  soon  think  of  get- 
ting pineapples  from  Minnesota  as  of  sending 
to  Connecticut  for  their  tobacco.  The  injustice 

104 


THE  M'KINLEY  BILL — PART  SECOND.      105 

of  this  provision  was  so  glaring  that  the  General 
Appraisers  have  taken  the  responsibility  of  nul- 
lifying the  law. 

The  next  schedule,  "Agricultural  Products 
and  Provisions,"  was  meant  to  show  the  farm- 
ers that  there  was  something  in  the  new  tariff 
for  them.  The  duties  on  almost  all  farm  prod- 
ucts are  increased.  In  most  cases  this  has  no 
effect  at  all,  since  the  things  taxed  are  not  im- 
ported and  never  have  been.  But  where  the 
new  duties  are  felt  the  farmers  usually  suffer 
by  them.  For  instance,  horses  and  mules, 
which  used  to  pay  20  per  cent,  are  now  taxed 
30  per  cent  if  they  are  worth  over  $150,  and 
$30  per  head  if  they  are  worth  less.  The  stock- 
raisers  along  the  Mexican  border  have  found  it 
very  convenient  in  the  past  to  be  able  to  supply 
themselves  with  Mexican  mustangs  costing  only 
$10  or  SI 5  apiece.  On  a  $10  horse  the  old  duty 
would  have  been  only  $2.  The  McKinley  tax  of 
$30  is  300  per  cent,  and  it  has  completely  broken 
up  the  business  of  the  American  farmers  and 
stockmen,  who  have  found  it  more  profitable  to 
use  cheap  Mexican  mustangs  than  to  go  to  the 
trouble  of  raising  horses  for  themselves.  Mr. 
McKinley  has  also  raised  the  duty  on  cattle 
from  20  per  cent  to  $10  per  head.  This  has  de- 
stroyed the  trade  of  the  Chicago  packers  who 
used  to  buy  Mexican  cattle,  ship  the  meat  to 
England  and  send  American  goods  to  Mexico, 
but  it  has  not  helped  the  American  cattle  men. 
The  Chicago  packers  have  simply  moved  to  Mex- 
ico, where  the  government  allows  them  to  im 
port  their  supplies  free  of  duty,  and  they  ship 


106  THE    TARIFF. 

their  canned  meat  from  there  direct  to  England 
where  it  cuts  under  the  taxed  American  meat. 
The  duties  on  wheat,  flour,  corn,  cornmeal,  oats 
and  rye  have  been  raised,  but  as  we  do  not  im- 
port any  of  those  things  the  prices  are  not  af- 
fected. Mr.  McKinley  might  just  as  well  have 
made  the  rates  1,000  percent  if  that  would  have 
been  any  satisfaction  to  the  American  farmer. 
Nobody  would  have  had  to  pay  a  cent  more  for 
wheat  or  corn  in  consequence. 

But  there  is  one  item  in  which  the  new  tariff 
does  affect  trade,  and  it  is  worth  while  to  see 
how  it  works.  The  United  States  both  buys 
and  sells  barley,  but  it  is  one  part  of  the  coun- 
try that  buys  and  another  part  that  sells.  Al- 
most all  the  barley  we  import  comes  into  the 
State  of  New  York  across  the  Canadian  border, 
and  is  used  in  the  large  brewing  and  milling 
establishments  in  that  immediate  neighborhood. 
Almost  all  we  export  goes  out  of  the  port  of  San 
Francisco  and  is  sent  to  Great  Britain.  Now, 
the  McKinley  bill  raises  the  duty  on  barley  from 
10  to  30  cents  per  bushel,  and  the  effect  is  this  : 
The  Canadians  have  lost  the  greater  part  of  the 
local  market  in  New  York,  and  so  they  must 
ship  to  England.  There  they  compete  directly 
with  the  Californian  barley,  which  has  to  sail 
five  times  as  far  to  get  to  market.  We  must 
either  meet  them  there  or  we  must  stop  ship- 
ping to  England  and  send  our  barley  across  the 
continent  to  Oswego,  paying  the  railroad  com- 
panies enough  for  freights  to  eat  up  all  the 
profits  on  the  sales.  The  old  way  was  convenient 
for  everybody  ;  the  new  way  puts  all  concerned 


THE  M'KINLEY  BILL — PART  SECOND.      107 

to  the  greatest  possible  amount  of  trouble  and 
loss. 

The  duties  on  spirits  and  on  some  kinds  of 
wines  are  increased  by  the  McKinley  bill,  and 
to  this  of  course  there  can  be  no  objection. 

The  taxes  on  many  kinds  of  cotton  manufac- 
tures are  enormously  increased  in  spite  of  the 
fact  that  raw  cotton  is  on  the  free  list  and  that 
the  manufacturers  have  been  steadily  prosper- 
ous. Ever  since  the  passage  of  the  bill  the  own- 
ers of  the  New  England  cotton  mills  have  been 
trying  to  cut  down  wages.  These  wages  were 
already  lower  in  some  cases  by  the  hour  than  in 
England  and  very  much  lower  by  the  piece.  On 
cheap  cotton  shirts  worth  $1.50  a  dozen  the  new 
taxes  are  $1  a  dozen  and  35  per  cent,  or  101.66 
per  cent  in  all.  The  women  who  make  these 
things  work  in  sweaters'  shops  in  New  York  for 
a  few  cents  a  dozen. 

Mr.  McKinley's  hemp,  jute  and  flax  schedule 
is  a  queer  mixture  of  good  and  bad.  It  puts 
raw  jute,  manila  and  similar  fibers  on  the  free 
list,  but  it  leaves  bags  and  burlaps  highly  taxed, 
so  that  the  farmers  get  no  benefit  from  the  re- 
moval of  the  taxes  on  the  raw  material. 
It  reduces  the  duties  on  cables  and  cordage,  but 
it  raises  the  rates  on  most  manufactures  of 
hemp  and  flax  from  35  to  50  and  60  per  cent, 
and  even  more. 

But  it  is  when  we  come  to  wool  that  the  new 
tariff  does  its  best  work.  The  wool  schedules 
show  very  greatly  increased  taxes  on  their  face, 
and  they  are  full  of  little  tricks  to  make  the 


108  THE    TARIFF. 

rates  still  higher.  For  instance,  one  section  of 
the  old  tariff  ran  thus  : 

"  Class  two,  combing  wools — That  is  to  say, 
Leicester,  Cotswold,  Lincolnshire,  Down  comb- 
ing wools,  Canada  long  wools,  or  other  like 
combing  wools  of  English  blood  and  usually 
known  by  the  terms  herein  used,  and  also  all 
hair  of  the  alpaca,  goat  and  other  like  animals." 

It  was  held  that  common  goats'  hair,  not  fit 
for  combing,  did  not  come  in  this  class,  and  so 
it  was  admitted  free.  The  McKinley  bill  has 
changed  the  section  to  read  thus : 

"Class  two,  that  is  to  say,  Leicester,  Cots- 
wold,  Lincolnshire,  Down  combing  wools,  Can- 
ada long  wools,  or  other  like  combing  wools  of 
English  blood  and  usually  known  by  the  terms 
herein  used,  and  also  hair  of  the  camel,  goat 
alpaca,  and  other  like  animals." 

Nobody  noticed  anything  out  of  the  way  in 
this  when  it  was  before  Congress,  except,  of 
course,  that  it  took  camel's  hair  off  the  free  list, 
but  after  the  bill  had  become  law  it  was  found 
that  by  dropping  the  general  heading  "Comb- 
ing wools,"  common  goats'  hair  had  become 
subject  to  a  tax  amounting  to  about  300  per 
cent. 

Another  trick  is  the  change  in  the  definitions 
of  " washed"  and  " scoured"  wool,  by  which 
some  of  the  duties  were  quietly  doubled.  Under 
the  old  tariff  washed  wools  were  those  washed 
in  clear  water  at  about  70  degrees  and  then 
rinsed  in  water  of  the  same  kind,  while  scoured 
wools  were  cleaned  with  soap,  alkalies  and  hot 
water — usually  by  machinery.  Under  the  Me- 


THE  M'KINLEY  BILL — PART  SECOND.      109 

Kinley  bill  washed  wools  are  merely  those  that 
have  been  washed  with  water  on  the  sheep's 
back.  Wool  washed  in  any  other  way  than  on 
the  sheep's  back  is  called  scoured  wool  and 
taxed  a£  three  times  as  much  as  wool  imported 
dirty. 

Still  another  trick  is  the  "sorting  clause." 
The  new  tariff  provides  that  wool  which  has 
been  "sorted  or  increased  in  value  by  the  rejec- 
tion of  any  part  of  the  original  fleece"  shall  be 
taxed  at  twice  the  ordinary  rate.  This  means 
that  if  the  packer  happens  to  see  a  burr  in  a 
fleece  and  picks  it  out,  along  with  a  little  of  the 
wool,  the  entire  bale  in  which  that  fleece  is 
packed  shall  pay  double  taxes — 22  or  24  cents  a 
pound  instead  of  11  or  12  cents. 

In  spite  of  all  these  traps  for  the  importers  we 
have  bought  more  foreign  wool  since  the  Mc- 
Kinley  bill  was  passed  than  we  did  before.  Our 
manufacturers  must  have  it  to  mix  in  their  bet- 
ter grades  of  goods,  and  they  have  made  up  for 
the  higher  cost  by  paying  less  for  their  Ameri- 
can wool,  which  has  no  other  market.  They 
have  been  able,  too,  to  charge  what  they  pleased 
for  their  goods,  for  the  taxes  on  woolen  manu- 
factures have  been  piled  up,  tax  on  tax,  until  it 
is  as  much  as  an  American  citizen's  life  is  worth 
to  buy  a  suit  of  clothes  abroad,  unless  he  is  rich 
enough  to  go  to  Europe  and  fill  his  trunks  with 
"personal  effects."  On  a  worsted  shawl  worth 
41  cents  a  pound  the  old  duty  would  have 
amounted  to  32.25  cents  a  pound,  or  78.9  per 
cent.  Under  the  McKinley  bill  it  has  to  pay 
64.5  cents  a  pound,  or  157.31  per  cent.  The 


110  THE    TARIFF. 

taxes  on  ready-made  clothing  have  oeen  about 
doubled.  Cheap  ingrain  carpets  pay  more  than 
their  entire  cost  at  the  factory. 

Mr.  McKinley  has  made  a  general  increase  in 
the  duties  on  silk  goods,  while  leaving  the  raw 
material  free.  This  might  be  thought  to  con- 
cern nobody  but  the  rich,  if  it  were  not  that 
every  working  girl  likes  to  decorate  herself  with 
bits  of  silk  ribbon,  and  that  silk  linings  for 
capes,  velvet  collars  and  silk  dresses  for  parties 
are  not  beyond  the  ambition  of  poor  men's  fam- 
ilies. The  rich  can  easily  pay  the  extra  tax ; 
the  poor  must  give  up  their  little  luxuries  if  the 
price  rises  too  high.  Besides,  the  American 
silk  mills  were  doing  very  well  indeed  before 
the  tariff  was  changed,  and  had  no  need  for 
more  protection. 

Under  the  head  of  pulp,  papers  and  books, 
there  are  several  little  items  that  help  to  wor- 
ry American  buyers.  Even  the  babies  in  this 
country  take  photographs  now,  and  everybody 
that  presses  the  button  knows  that  the  best 
sensitized  paper  comes  from  Germany.  Un- 
der the  old  tariff  this  paid  a  duty  of  25  per 
cent.  Mr.  McKinley  tells  American  photogra- 
phers that  they  must  pay  35  per  cent  or  use 
a  poorer  quality  of  paper  made  in  this  coun- 
try. The  old  tariff  taxed  playing  cards  at  100 
per  cent.  The  McKinley  tax  is  fifty  cents  a 
pack.  This  amounts  to  only  25  or  50  per  cent 
on  the  fine  cards  that  might  be  imported  by 
a  millionaires'  club,  but  it  is  about  500  per 
•cent  on  the  cheap  pasteboards  with  which  a 
poor  family  passes  away  the  winter  evening. 


THE  M'KINLEY  BILL — PART  SECOND.       Ill 


Then  all  the  odds  and  ends  of  paper  goods 
slate  books,  music  paper,  covers  for  candy 
boxes,  embossed  paper,  paper  bags,  lace  pa- 
per, asbestos  paper,  emery  paper,  paper  filters, 
solar  printing  paper,  and  such  things,  which 
used  to  pay  15  per  cent,  now  pay  25. 

Under  "Sundries"  the  McKinley  bill  has  in- 
creased a  number  of  taxes  and  reduced  a  few. 
Every  sewing  woman  in  the  United  States 
feels  the  raise  in  the  duty  on  pearl  buttons 
from  25  to  200  or  300  per  cent.  The  cheapest 
ladies'  and  children's  kid  gloves,  such  as  work- 
ing girls  wear,  must  pay  $3.25  per  dozen,  or 
over  100  per  cent  on  the  foreign  wholesale 
price.  Fur  hats,  which  used  to  be  let  off  with 
30  per  cent,  are  now  taxed  at  55  per  cent.  The 
duties  on  works  of  art  are  reduced  from  30 
to  15  per  cent,  and  this  is  one  of  the  few  good 
points  of  the  bill. 

It  must  not  be  supposed  that  Mr.  McKinley 
raises  taxes  all  the  time.  He  may  make  it 
harder  to  buy  woolen  and  cotton  clothes,  tin- 
ware, paper  and  crockery,  but  he  lets  us  get 
unstrung  glass  beads  at  10  per  cent,  instead  of 
50.  The  duty  on  cleaned  human  hair  is  re- 
duced from  30  to  20  per  cent,  and  that  on  col- 
ored feathers  from  25  to  10. 

The  free  list  shows  this  liberality  still  more 
clearly.  The  McKinley  bill  removes  the  taxes 
from  all  the  following  important  necessaries 
of  life :  Unground  acorns,  wild  animals  for 
exhibition,  art  educational  stops,  beeswax,  books 
and  pamphlets  in  foreign  languages,  books  and 
music  for  the  blind,  alizarine,  crude  opium, 


112  THE    TARIFF. 

sour  orange  juice,  several  salts  of  potash,  dan- 
delion root,  chlorate  of  soda,  unground  chicory 
root,  common  blue  clay,  engravers'  diamonds, 
watch  jewels,  uncleaned  human  hair,  currants, 
dates,  hat  material  of  straw  and  other  vegetable 
fiber,  india  rubber  scraps,  hand-sewing  and 
darning  needles,  forged  shot-gun  barrels,  straw 
matting,  nut  oil,  olive  oil  for  mechanical  pur- 
poses, nickel  ore,  sulphur  ore,  bulbs  and  bulb- 
ous roots  not  edible,  orchids,  lily  of  the  valley 
and  other  hothouse  plants,  raw  sugar,  molasses, 
coal  and  wood  tar,  jute,  jute  butts,  manila,  sisal 
grass,  sunn  and  other  grasses,  tinsel  wire,  to- 
bacco stems,  spirits  of  turpentine,  briar  root  and 
briar  wood  cut  into  blocks.  All  we  have  to  do 
to  escape  taxation  is  to  live  on  sugar,  currants, 
dates  and  crude  opium,  ride  on  wild  animals, 
confine  our  reading  to  foreign  languages,  build 
our  houses  of  blue  clay  and  make  our  clothes  of 
uncleaned  human  hair.2  '£ 


14  DAY  USE 

RETURN  TO  DESK  FROM  WHICH  BORROWED 

LOAN  DEPT. 

This  book  is  due  on  the  last  date  stamped  below,  or 

on  the  date  to  which  renewed. 
Renewed  books  are  subject  to  immediate  recall. 


t2)o«'60r>B 

ftec-c. 

Mftp   9  4  2001 

Ju"i3m0 

I8Mr'63MF 

REC'D  LD 

MAR1819K 

LD  21A-50m-4,'60 
(A9562slO)476B 


General  Library 

Uuirersity  of  California 

Berkeley 


YC   15379 


THE  UNIVERSITY  OF  CALIFORNIA  LIBRARY 


